Homes England has joined with Octopus Real Estate, part of Octopus Investments and a leading specialist real estate investor and lender, to create the Greener Homes Alliance 2. The renewed alliance will reinforce a responsibility to support small and medium-sized (SME) housebuilders, whilst encouraging greener building practices.
The alliance will commit £150 million of funding, £42 million of which will be provided by the Agency’s Home Building Fund. This will provide SME housebuilders with further loan finance enabling even more high-quality, energy efficient homes to be built across England.
The first phase of the alliance launched in 2021, as part of broader efforts to expand the supply of finance available to SMEs, and funded over 550 much needed, new sustainable homes across the country. More than 40% of the homes built during phase one achieved an Energy Performance Certificate (EPC) rating of A, and 100% secured a Standard Assessment Procedure (SAP) score higher than 86, significantly higher than the UK average EPC rating of D and SAP score of 67.
Phase one of the Greener Homes Alliance made a significant impact, with 20 loans completed totalling £150million – an average loan size to SME developers of £7.5 million.
Phase two of the Greener Homes Alliance will seek to support the creation of more sustainable homes by introducing ten new criteria, four of which must be met for developers to benefit from a 1.25% discount on their interest rate. If six or more criteria are met, developers will be eligible for a 2% discount.
The new criteria for phase two will include the use of mixed methods of construction (MMC) in the fabric of buildings and a real living wage paid to workers on site. It will also encourage borrowers to support the Lighthouse Charity, a leader in mental health within the construction industry.
To qualify for funding from the Alliance in the first place, all schemes must deliver specific key performance indicators as a minimum. Developers must ensure that all homes built are fossil fuel free and have an average SAP score of 85 or above.
Marcus Ralling, Chief Investment Officer at Homes England said:
“Small and medium housebuilders play a vital and essential role in driving the delivery of much needed, new and sustainable homes.
“This extended Alliance is an excellent example of how we are working with partners to support the SME housebuilders that are crucial to building a diverse and resilient housing sector.”
Andy Scott, Co-Head of Debt, Octopus Real Estate, added:
” We are extremely proud of the impact our Greener Homes Alliance initiative has had when it comes to supporting developers looking to make greener decisions for their projects, and we’ve spent a lot of time working out the new criteria with Homes England to make sure the next phase is as impactful as possible.
“At Octopus, our mission is to reimagine real estate through the delivery of high-quality, sustainable places for people to live that are fit for the future and address societal needs such as fuel poverty. Working with esteemed government agencies to enact real change for the developers who have the expertise and capability to deliver such homes is a huge part of this.”
ENDS
Notes to editors:
An Energy Performance Certificate (EPC) tells you how energy efficient a property is, giving a property an energy efficiency rating from A (best) to G (worst) that is valid for 10 years. An EPC contains information about a property’s energy use and typical energy costs and steps to improve a property’s energy efficiency.
The Standard Assessment Procedure (SAP) for the energy rating of dwellings is the methodology currently used by the government to estimate the energy performance of homes. A SAP score provides a rating between 1 and 100, this range is then divided into categories A (best) to G (worst).
The new criteria introduced for phase two will include:
• An average SAP score of 92+ (EPC A)
• More than 90% of waste from the site avoids landfill
• Biodiversity Net Gain of over 20%
• More than 50% of new homes will be Zero Bills ready
• Regeneration of a brownfield site
• Potable water usage reduced to less than 110L per person per day
• Use of Mixed Methods of Construction (MMC) in the fabric of the building
• The Real Living Wage must be paid to all workers on site
• The borrower to support Lighthouse Charity, a leader in mental health within the construction industry
• More than 25% of units to be affordable built on-site, or in line with local social housing plans
All schemes must also deliver the following KPIs as a minimum:
• All homes to be fossil fuel free
• Every scheme to have average SAP score of 85+
