Phil Kelly, Partner for Sustainability at Ridge, shares insights from the Building the Future Conference on financing the UK's decarbonisation challenge. The conversation around retrofitting the UK's existing building stock often stalls at a familiar roadblock: funding. But according to leading experts at the recent Building the Future Conference panel on "Retrofit Revolution," the issue isn't simply a lack of money - it's about how we direct, structure, and think about investment in our built environment.

The real funding problem 

Dr Kayla Friedman from the University of Cambridge’s Sustainability Leadership programme challenged the conventional wisdom head-on: “A lot of people default to, there’s no funding. I think there is funding.” The problem, she argues, lies in inconsistent government messaging and misdirected resources. 

Currently, substantial government finance flows into property through schemes like shared ownership and Help to Buy—but exclusively for new builds. Friedman suggests redirecting even a portion of this funding toward retrofit could establish supply chains, improve training, and scale up the workforce far more effectively than relying on scattered small-scale projects. 

What clients really need: confidence and clarity 

As Phil Kelly, explained during the panel, the fundamental barrier isn’t just cost—it’s confidence. “Landlords, tenants, homeowners need more confidence that the interventions are the right ones. They want to know exactly how much it’s going to cost, and they also want a guarantee and a really clear indication as to what the outcome’s going to be.” 

Phil identified two critical blockers preventing this confidence: 

• Energy pricing disparity: Electricity remains significantly more expensive than gas, creating a genuine risk that switching fuels could actually increase utility bills rather than reduce them. This fundamentally undermines the return-on-investment case that clients need to see. 

• Unreliable metrics: Energy Performance Certificates (EPCs), while currently central to policy and legislation, don’t provide accurate indicators of actual building energy use. Kelly drew a compelling analogy: “It’s the same as TVs. If you look at your TV at home, it says 912 kilowatt hours per year. Does that mean that regardless of how much Netflix you watch, you’re going to use 912 kilowatts? No. We know that’s not right. So the same goes for EPCs.” 

A performance-based approach 

The most successful retrofits, according to Kelly, are those built on comprehensive surveys and digital analyses that map all gaps in existing building performance and condition. “We know exactly everything we need to know about that building… And then when we estimate the costs, the impacts, the outcomes, we’re able to give really high quality advice as to what the return is going to be. And that’s what gives confidence.” 

Phil offered a personal example that illustrates the power of data-driven decisions: installing Wi-Fi-connected radiator valves on his property reduced heating consumption by 45%—a decision informed by understanding actual performance, not EPC ratings. 

The split incentive challenge 

For commercial properties, Phil highlighted a particularly thorny issue: the upfront costs, operational savings, and enhanced asset value from retrofit are often experienced by three different stakeholders. “It’s really difficult to talk about return on investment when those three people are different people.” 

This requires what Phil called “the C word”—collaboration. As an example, Ridge recently relocated their Liverpool office and needed to negotiate with their landlord to align the building’s infrastructure with their net-zero decarbonisation strategy. “We needed to have the conversation… It’s your building, it’s your asset, your asset value. But we need, as a tenant, X. There are things we could do together to make that work out.” 

Policy recommendations 

The panel reached consensus on several policy interventions that could unlock retrofit funding: 

• VAT reform: The 20% VAT on retrofit work represents a substantial barrier, even for those who want to invest in their properties. 

• Electricity pricing: Decoupling electricity prices from gas—the Climate Change Committee’s number one recommendation—is essential to make heat pumps and electrification financially viable. 

• Long-term policy signals: Consistent, long-term government policy would give tradespeople the confidence to retrain and businesses the certainty to invest in supply chains. 

 The business case beyond politics

Dr Friedman urged moving the conversation away from political positioning: “It is financially smart to look at retrofit. It is financially savvy and business savvy and insulates you against a future that is looking increasingly challenging… This makes business sense.” 

With 70-80% of buildings that will be in use in 2050 already standing today, the question isn’t whether we can afford to retrofit—it’s whether we can afford not to. 

You can contact Phil Kelly with any thoughts and questions, or to explore the subject further.