Government Spending Review 2025: What It Means for the Housing Market and Retrofit Sector

The UK’s housing sector has long been under pressure — from chronic undersupply to rising energy bills and the urgent need to decarbonise existing stock. In the latest 2025 Spending Review, Chancellor Rachel Reeves announced a £39 billion investment over the next decade into affordable housing, with £13.2 billion ringfenced for the Warm Homes Plan. Together, these pledges represent one of the most significant public sector commitments to housing in recent memory — and signal a potentially transformative moment for the retrofit market.

Retrofitting: From Policy Priority to Funded Reality

The headline £13.2 billion for the Warm Homes Plan will directly target energy efficiency improvements in the UK’s ageing housing stock. With over 80% of 2050’s homes already built, retrofitting is no longer optional — it’s essential.

The plan includes funding to:

• Upgrade insulation and building fabric
• Install low-carbon heating systems (e.g. heat pumps, solar thermal)
• Improve ventilation and air quality
• Deliver interventions at scale, starting with fuel-poor and low-income households

This isn’t just a green agenda. With energy costs still volatile, retrofitting is increasingly seen as a cost-of-living solution, with long-term benefits for household bills, health outcomes, and housing equity.

Market Impacts: Growth, Skills, and Standards

A Focus on Measurable Results

The Spending Review’s language is clear: this is not just a spending pledge, it’s a results-driven investment. It reflects a shift away from purely theoretical modelling and toward evidence-based delivery.

For retrofit to be successful, we must close the performance gap — the all-too-common disconnect between how homes are designed or upgraded to perform, and how they actually perform once occupied. Tools that provide measured outcomes — like airtightness, heat loss, ventilation effectiveness, and real-time energy use — will be critical in validating success.

A New Chapter for the Housing Market

While much attention will be paid to the new-build targets under the £39bn package, this Spending Review finally puts retrofit on equal footing. By making retrofit an essential component of affordable housing policy and net zero delivery, the government has recognised the central role existing homes play in the climate, cost-of-living, and housing crises.

The challenge now lies in delivery: ensuring that funding is deployed efficiently, projects are managed with rigour, and results are transparently measured.

Key Takeaways:

1. £13.2bn in funding gives retrofit a once-in-a-generation boost
2. Market demand for skilled professionals and retrofit technologies will rise
3. Performance measurement and accountability will become central

Retrofit is no longer a side issue — it’s a cornerstone of housing policy.

At Build Test Solutions, we’re already working with housing providers and local authorities to ensure retrofitting delivers on its promises — in comfort, carbon and cost.