External Wall Insulation: What Went Wrong and What Homeowners Need to Know

The UK Housing Problem

In the UK, we have a wide range of homes. Not just in style, but in age as well. We have a huge mix of Victorian terraces, Edwardian semis, pre-war and inter-war housing, and more modern buildings and flats. Around 20% of all UK houses were built before 1919, meaning a lot are over 100 years old. And older homes might have solid brick or stone walls, which means cavity wall insulation just isn’t an option. So when it’s time to add modern insulation, the options are to add it to the outside of the walls, or the internal walls. Which isn’t always practical.

External wall insulation works well in the right building, done in the right way by the right people. The problem is that many UK buildings don’t tick those boxes. For example, if you insulate one terraced house but not the adjoining buildings you might create cold spots where the insulation stops. Those party walls might become thermal bridges, which means heat escapes, moisture builds up and before you know it, you’ve got condensation and mould. In post-war prefabricated concrete buildings, their solid walls or panel systems are very easy to insulate badly, which leads to trapped moisture with nowhere to go. And ultimately cause damp, structural deterioration and other long-term damage that can be impossible to fix.

Then there’s the heritage and listed buildings. Many insulation systems change how a building looks, which causes all sorts of problems for planning permission. And even when you are allowed to install insulation, it has to be very carefully designed to make sure the building can still deal with moisture, otherwise it stays stuck inside the walls.

The Government Schemes

Over the years, the government has made several big interventions to help with the cost and installation of insulation across the UK. There was the:

Green Homes Grant: Running between 2020 and 2025, this was a scheme to subsidise the cost of energy-efficient home improvements by providing vouchers to applicants that went covered up to two-thirds of the cost of eligible improvements. It covered up to £5,000 for most people, and for those on benefits it could cover 100% of the cost. Unfortunately one of the eligible measures in the scheme was spray foam insulation, which has since become a whole scandal of its own.

Energy Company Obligation: This requires all medium to large energy suppliers to fund and install free energy-saving home improvements, like insulation, heat pumps and solar panels. At time of writing the current version is ECO4, which aims to tackle fuel poverty and reduce carbon emissions. This scheme has been running since 2013, and iteration ECO4 is due to finish on December 1st 2026 to make way for the next one.

Great British Insulation Scheme: Designed to help people get free or cheaper insulation to reduce their home’s energy bills. It covered a range of insulation upgrades including loft, cavity wall, solid wall and underfloor. This scheme ran from July 2023, and closed December 2026.

Warm Homes Plan: This one hasn’t even launched yet! But the general idea is that this £15 billion initiative will upgrade 5 million homes by providing grants and low-cost financing to install insulation, solar panels and heat pumps. It’s projected to lift 1 million families out of fuel poverty by 2030.

So, What Went Wrong?

All of those schemes sound fantastic. So, what went wrong?

Well, when it came to any of them that offered external wall insulation, quite a lot! After concerns were raised, the National Audit Office stepped in and published a report, which came out in October 2025. The results were beyond shocking. According to them:

And yes, it really was that bad. We’re talking about gaps in insulation, poor sealing, and bad detailing around windows and roofs. In other words, all the places water likes to get in. And the responsibility for that now sits with the Department for Energy Security and Net Zero. However, a lot of the companies who did the actual work no longer exist, and the guarantees given with the work may not cover the real cost of repairs.

One of the biggest failures here was a lack of oversight. Under the schemes, energy suppliers didn’t have to actually check the quality of the work being done. They just had to use companies registered with TrustMark. This scheme was supposed to identify problems early – and it did. The problem was they didn’t raise the alarm for 3 years. After the Audit Office report was published, 38 installers registered with TrustMark were suspended. On top of that, the report found almost no accountability, vague responsibility descriptions, and evidence of various companies gaming the system for gain to the tune of £millions.

So What Now?

Thankfully, the National Audit Office was very clear in its response. The government must take clear responsibility, consumer protections need to be strengthened, and fraud/non-compliance has to be properly monitored and reported.

Of course, all of this doesn’t mean that external wall insulation is automatically bad. But in the UK with our old and complex buildings, it’s not something you can rush, or that you can treat as nothing more than a box-ticking exercise. Because when it’s done badly, it wastes money, damages homes, and puts people’s health at risk. If you had external insulation fitted under one of these schemes, or you’re not sure, it’s always best to have a surveyor assess it for you. At Harrison Clarke, we have a wealth of experience in assessing problems with insulation systems, so we would be happy to help.

For more expert advice on surveying and property matters, check out our range of informative videos on our website or YouTube channel. Harrison Clarke Chartered Surveyors is here to guide you every step of the way!

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