Institutional fund manager Octopus Real Estate and the UK government’s housing delivery agency are to provide finance and support to housebuilders to help develop higher-quality and more energy-efficient homes in England.
The Greener Homes Alliance, established by Octopus and Homes England, will commit £175m (€207m) to providing loan finance and expert support to SME housebuilders. Homes England is committing around one third (£46m) of the capital.
The alliance will provide loans of between £1m and £20m to finance residential developments that must achieve a minimum energy performance certificate (EPC) rating of B.
Homes with even higher energy efficiency will benefit from increasing interest-rate margin discounts – homes with an EPC rating of A, for example, will benefit from a margin discount of 2%.
Free expert advice will also be provided by sustainability consultants McBains and Octopus Energy.
The intention is to support the construction of up to 750 new homes while also increasing the knowledge and expertise of SME housebuilders in the area of low-carbon construction.
The announcement comes days after the UK government published its plans to cut greenhouse gas emissions, including encouraging homeowners to retrofit homes by replacing gas boilers with heat pumps.
Benjamin Davis, CEO of Octopus Real Estate, said: “Creating more energy-efficient homes across the UK is vital if we’re to make progress towards net zero. Our joint venture with Homes England will help meet this increasingly urgent need to develop more sustainable homes.
“The alliance will provide access to funding and expertise to help developers ‘go green’ when making decisions for their developments. Given the public are more in tune than ever before about how energy-efficient their homes are, and in turn their own impact on the environment, the opportunity for developers building greener homes is huge.
“As a B Corp, Octopus Real Estate is committed to our impact goals and the opportunity to work with the real estate sector, alongside institutional investors, to create choice for developers to future proof developments and drive the green acceleration of the property market.”
Andy Scott, head of residential development at Octopus Real Estate, said: “Although green credentials may be an aspiration for most developers, sometimes access to funding, costs and education can stand in the way of these aspirations.
“The alliance will offer tangible discounts which can help fund the costs to support the delivery of green developments, plus access to advice and education, which will enable SME housebuilders to deliver future proof, energy-efficient homes to be enjoyed for generations to come.
“On top of this, with the current news surrounding rising energy prices, building more energy efficient homes, with lower running costs, will pass on savings over the long term to consumers.
”The property market has an opportunity to play a meaningful role in tackling climate change, but we need to act now. We’re excited that we have the opportunity to start making an impact alongside Homes England and to think differently about how we build homes for future generations.”
Housing Minister Christopher Pincher said: “We are determined to ensure that our homes are fit for the future, and improving energy efficiency is a key part of our ambitions to reach net zero emissions by 2050.
“Our Future Homes Standard will ensure that from 2025 new homes produce at least 75% lower CO2 emissions and be future-proofed with low-carbon heating. This partnership will help reach our targets for cleaner, greener homes for future generations.”
Peter Denton, CEO of Homes England, said: “This new partnership, the latest in a series of impactful lending alliances, will give smaller housebuilders both the funding and the knowledge needed to build more sustainable homes.
“The Greener Homes Alliance brings developers and lenders closer together, providing affordable finance, improving knowledge sharing and creating new paths to net zero.”