Future-proofing society

Prohibitive costs of property and green technology

The latest edition of our Rebuilding Britain Index paints a picture of rising property prices and climate technologies that are unaffordable for some households

20 Oct 2021

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Sir Nigel Wilson

Group Chief Executive Officer

The latest Legal & General Rebuilding Britain Index has revealed that house prices are rising as a proportion of income and that some homeowners are struggling to afford the green technologies needed in the fight against.

Recent government data revealed that UK house prices have risen by 13.2% in the past 12 months leading to a deepening of the national housing crisis. House prices are rising as a proportion of average income leading to deteriorating consumer sentiment around the affordability of homes.

Our research also found that households on lower incomes are far slower to adopt green technologies because of the cost. The average UK household has a funding gap of over £4,000 on the installation of solar panels and a nearly £15,000 gap on the installation of a ground source heat pump.

Housing crisis

At a national level the RBI Housing Index has fallen for the second consecutive quarter. In particular there has been a decline the perceived availability of affordable starter homes, social housing and rental properties, as well as towards the local housing market meeting local needs.

Our research clearly shows that there are pockets within the UK, typically within London, the South-East and South-West of England that face particularly acute housing issues. Cornwall, North Devon, East Devon and Chichester are the hardest hit local authorities. Cornwall, specifically, is the lowest scoring local authority in the UK on sentiment towards the local housing market.

These findings come at a time when the RBI Jobs & Economic Prosperity Index shows signs of recovery. However, the regional economic disparities across the index remain between the outperforming regions of London and the South-East of England and the underperforming North East and Wales.

Green technology

To mark the COP26 milestone, the latest edition of the RBI takes an in-depth look not just at progress to build back better but also to build back greener. It reveals there is a real chance of less affluent communities being left behind in the transition to clean and green technology at a household level.

Higher income households (£40,000+ per annum) are far more likely to have renewable energy sources installed (20%), drive an electric vehicle (18%) and have a smart meter in their home (53%) compared with households with an annual income of under £20,000 (8%, 4% and 44% respectively).

Our research shows that UK consumers are particularly open to making green modifications to their homes – with 52% very or fairly willing to install a solar panel and 54% willing to install a ground source heat pump. However, the financial realities of such modifications are a significant barrier to adoption. Consumers are only willing or able to contribute around 13% of the costs associated with installing a solar panel and 10% of the cost of installing a ground source heat pump.

The Boiler Upgrade Scheme announced by the UK Government, which provides households up to £5,000 to install an air source heat pump, still leaves a significant shortfall on households to cover the cost.

Simon Lomax, CEO at Kensa Group:

“This week’s announcement on the Boiler Upgrade Scheme does not go far enough. It lacks scale and is just a small step towards the Prime Ministers’ 2028 target of 600,000 installations. The £450m fund can support a maximum of 90,000 installs (30,000 per year) which is less than 0.4% of the UK’s homes. 

Right now, the UK has the second lowest penetration of heat pumps across Europe so much more needs to be done to speed up deployment. There should be particular focus on more efficient variants, like ground source, which deliver the very best outcomes for the householder (running costs), the environment (carbon emissions), and put less pressure on the electricity grid.

There is a wider opportunity for networked heat pumps – whereby whole streets and communities can connect to a local heat source that uses the natural heat in the ground or possibly waste heat. There are whole tower blocks in London that have been retrofitted with heat pumps for each flat connected to a shared network using this approach.

A meaningful deployment programme would need £1bn per annum but designed appropriately would leverage in billions of pounds of private finance. It would also save a greater amount because more efficient ground source heat pumps would require less generating capacity and fewer network upgrades so the overall costs to the electricity system would be lower.”

With the government target of installing an additional 600,000 heat pumps every year by 2028, it’s clear that the onus will be on the government to fund these installations.


Nigel Wilson, CEO at Legal & General, explains:

“By levelling-up UK jobs and economic opportunity we can go some way towards alleviating housing pressures. However, this is only likely to go so far. The UK needs a new partnership approach, involving local authorities, developers, investors and central government to boost the overall housing supply and also ensure we are building enough of the right types of homes in the right places.

He adds: “Currently, the UK runs the risk of creating two visions of Britain: one where more affluent communities benefit from the green and clean technologies of the 21st century, and another where less affluent communities do not. Climate transition cannot be restricted to the better off. If the UK is to successfully hit its carbon neutral target by 2050, this transition needs to take place in a socially inclusive manner.

“To ensure this outcome, central government has a major role to play in facilitating local government and households to adapt local infrastructure to address sustainability and climate concerns.”

What is the Rebuilding Britain Index?

The RBI was established to measure the UK’s progress in levelling up on a quarterly basis, surveying 20,000 people over the course of the year and tracking social and economic progress across 52 measures, including Health and Social Care, Education, Housing, Jobs & Economic Prosperity, Environment, Energy, Transport and Digital.