The Unintended Consequences of the Green Homes Grant
How government policy created a housing crisis
The Well-Intentioned Policy
In 2020, the UK government launched the Green Homes Grant—a £2 billion scheme offering homeowners up to £5,000 (£10,000 for low-income households) to install energy-efficient improvements. The goal: reduce carbon emissions and help homeowners save on energy bills. The result: thousands of properties made unmortgageable and lost tens of billions in collective value.
What Was the Green Homes Grant?
Program Overview (September 2020 - March 2021)
Funding Structure
- • Government covered 2/3 of improvement costs (up to £5,000)
- • Low-income households could receive 100% funding (up to £10,000)
- • Homeowners paid remaining 1/3 themselves
- • Work had to be done by government-approved installers
Eligible Improvements
Primary measures:
- • Insulation (including spray foam)
- • Heat pumps
- • Solar thermal systems
Secondary measures:
- • Double/triple glazing
- • Heating controls
- • Draught proofing
The Fatal Flaw:
Spray foam was explicitly included as eligible "insulation" without any warnings about mortgage/insurance consequences. Government-approved installers aggressively marketed it as a free/cheap solution.
How It Went Wrong
Problem 1: Aggressive Marketing by Installers
Government approval gave spray foam installers massive credibility. Marketing messages:
"Government-funded home improvement!"
"The government is covering 2/3 of the cost because spray foam is the most effective insulation available."
"Save £500+ per year on energy bills!"
"Professional installation normally £8,000—you pay just £2,000 with the grant."
"Quick decision needed—grant ending soon!"
"Limited funding available. Book now or miss out on free government money."
What installers DIDN'T disclose: Mortgage lenders would reject these properties within 2-3 years.
Problem 2: No Due Diligence on Long-Term Impacts
Government failed to consult mortgage lending industry before including spray foam in scheme.
What should have been checked:
- • Do lenders accept spray foam? (Answer: Increasingly no)
- • Does RICS guidance flag concerns? (Answer: Yes)
- • Are there building regulation issues? (Answer: Yes, ventilation)
- • Will insurers cover these properties? (Answer: Increasingly no)
Basic due diligence would have revealed spray foam was inappropriate for grant funding.
Problem 3: Vulnerable Homeowners Targeted
Low-income households eligible for 100% funding (£10,000) were heavily targeted:
- • Older homeowners on fixed incomes
- • Families struggling with energy bills
- • First-time buyers in older properties
- • People with limited financial sophistication
The pitch: "Free home improvement from the government—no catch, no cost to you!"
These are precisely the homeowners who can least afford £8,000-£15,000 removal costs or property value losses.
Problem 4: Rushed Implementation
Scheme launched September 2020, originally ending March 2021 (6 months). Extended to September 2021 after poor uptake.
Implementation problems:
- • Installer approval process inadequate (many cowboys approved)
- • No quality control on installations
- • No consumer protection warnings
- • Application portal repeatedly crashed
- • Homeowners pressured to sign quickly before funding ran out
Speed prioritized over safety—classic policy failure pattern.
The Scale of Damage
Estimated Impact
Properties Affected
Conservative estimate: 15,000-25,000 properties had spray foam installed via Green Homes Grant
Additional impact: Grant legitimized spray foam, encouraging 30,000-50,000 more private installations (2020-2022)
Total affected: 45,000-75,000 UK properties
Financial Impact on Homeowners
Per property value loss: £20,000-£80,000 (30-50% discount for cash buyers)
Removal cost per property: £3,000-£20,000 to restore mortgageability
Average total impact: £15,000-£40,000 per affected homeowner
Collective homeowner losses: £675 million - £3 billion
Government Cost
Grant payments for foam installations: £30-£75 million (2/3 of 15,000-25,000 installations @ £3,000-£6,000 each)
Future liability: Potential compensation claims if policy deemed negligent
Taxpayers funded creation of unmortgageable properties
Real Victim Stories
Case 1: The Johnsons (Low-Income Family)
Background: Family of 4, household income £28,000. Property worth £185,000. Qualified for 100% grant funding (£10,000).
What happened: Installer cold-called January 2021. "Free government-funded insulation to cut your energy bills by £600/year!" Signed up immediately. Foam installed February 2021.
Discovery: Tried to remortgage December 2023 (fixed rate ending). Nationwide rejected due to foam. No other lender would accept.
Current situation: Trapped on lender's standard variable rate (7.5% vs 4.5% available rates). Extra £4,500/year mortgage cost. Cannot afford £8,000 removal. Cannot sell without massive loss.
Case 2: Margaret (Pensioner)
Background: Age 71, widow, living on state pension. Property worth £240,000. Struggling with £180/month heating bills.
What happened: Saw Green Homes Grant TV advert. Applied August 2020, approved for £5,000 grant. Paid £2,500 herself (her entire savings). Foam installed October 2020.
Discovery: Needed equity release 2024 to fund care home for herself. All providers rejected due to foam.
Current situation: £240,000 property equity inaccessible. Cannot afford care home (£3,800/month). Cannot afford removal. Facing forced house sale at 40% discount to cash buyer—losing £90,000+.
Case 3: First-Time Buyer
Background: Sarah, age 28, purchased first home September 2020 (£210,000). Previous owner had installed foam via Green Homes Grant July 2020.
What happened: Lender (Santander) approved mortgage September 2020—before foam became widely flagged issue. Survey missed foam (poor surveyor). Completed purchase.
Discovery: Tried to remortgage September 2024 (5-year fixed ending). All lenders rejected. Trapped.
Current situation: Paid £8,500 for emergency removal (August 2024). Lost life savings. Now has mortgage but effectively bankrupt. Considering whether to pursue seller/surveyor for damages.
Why Government Hasn't Fixed It
1. Scheme Already Ended
Green Homes Grant closed September 2021. Government position: "That program is finished. Current issues are homeowner responsibility."
2. No Legal Liability (Probably)
Government argues:
- • Homeowners made choice to participate
- • Installers (not government) responsible for disclosure
- • Lending/insurance industries changed policies post-grant
- • No explicit government guarantee properties would remain mortgageable
3. Cost of Compensation
If government admitted fault and funded removal for all affected properties: £135-£500 million minimum. Politically unpalatable.
4. Embarrassment & Blame-Shifting
Admitting policy failure opens government to criticism, lawsuits, and political damage. Easier to stay silent and hope issue fades.
What Should Have Happened
Policy Best Practices (Ignored)
✓ Consult with mortgage lending industry
Before including product in grant scheme, verify it won't affect mortgageability
✓ Require full disclosure from installers
Mandatory written warnings about mortgage/insurance implications
✓ Exclude problematic products
If mortgage industry flags concerns, remove from eligible measures list
✓ Quality control & audits
Verify installations meet standards, homeowners properly informed
✓ Long-term monitoring
Track whether grant-funded improvements cause problems 5-10 years later
Options for Grant Victims
1. Pay for Removal Yourself
Reality: Government not offering compensation. Most victims must fund removal from savings/loans.
Cost: £3,000-£20,000. Restores property value and mortgageability.
2. Pursue Installer for Damages
Possibility: If installer failed to disclose mortgage consequences, may have breached consumer protection law.
Challenges: Many grant installers now dissolved/untraceable. Legal costs high. Success uncertain.
Consult solicitor specializing in consumer law for free initial assessment.
3. Contact Your MP
Political pressure: If enough grant victims contact MPs, government may establish hardship fund or compensation scheme.
Provide: dates, installer details, current situation, financial impact. Request MP raise issue in Parliament.
The Lessons
Policy failure: The Green Homes Grant demonstrates what happens when government rushes policy without consulting affected industries and protecting consumers.
Victim impact: 45,000-75,000 homeowners—many vulnerable—face £15,000-£40,000 losses each, totaling £675 million - £3 billion collectively.
Current reality: Government not offering compensation. Victims must fund removal themselves or accept massive property value losses.
If you had foam installed via Green Homes Grant: removal is your only practical solution. Don't wait for government help that isn't coming.