This is the second phase of an agreement established in 2021 to lend £175m of discounted loans to SME developers in England to build energy-efficient homes, with Homes England providing £46m.
The latest commitment will see £150m of funding, of which £42m will be provided by Homes England’s Home Building Fund, to lend to SMEs.
The first phase funded more than 550 new, sustainable homes in England with more than 40% of these homes achieving an Energy Performance Certificate (EPC) rating of A. All homes developed through the initiative achieved a Standard Assessment Procedure (SAP) score of more than 86.
Some 20 loans were deployed with an average loan size of £7.5m.
The Greener Homes Alliance 2 will have 10 new criteria, four of which must be met by developers to secure a 1.25% discount on the interest rate. If six or more criteria are met, developers will be eligible for a 2% discount.
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The new criteria include the use of mixed methods of construction (MMCs) in the fabric of buildings and a Real Living Wage paid to onsite workers. Borrowers will also be encouraged to support the Lighthouse Charity, which supports mental health in the construction industry.
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 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 onsite, or in line with local social housing plans
To qualify for funding, projects must deliver specific performance indicators as a minimum, such as ensuring all homes built are fossil fuel-free and have an average SAP score of 85 or higher.
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 like Octopus Real Estate to support the SME housebuilders that are crucial to building a diverse and resilient housing sector.”
Andy Scott, co-head of debt at 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.”
