Homes England has collaborated with real-estate investor and lender Octopus Real Estate to launch the Greener Homes Alliance 2, with a £150m ($194m) commitment to finance housing projects across England.
The initiative aims to support small and medium-sized enterprise (SME) house builders with the loan financing needed to construct high-quality and energy-efficient homes.
This funding includes a £42m contribution from Homes England’s Home Building Fund.
The alliance’s initial phase, which began in 2021, financed more than 550 sustainable homes nationwide.
This effort was part of a larger strategy to increase the financial resources available to SME homebuilders.
More than 40% of the homes constructed in phase one secured an energy performance certificate (EPC) rating of A, exceeding the UK’s average EPC rating of D.
These homes also surpassed the national average Standard Assessment Procedure (SAP) score of 67, with a 100% achievement rate of scores above 86. The SAP is the UK government’s system for estimating the energy performance of dwellings.
The first phase culminated in 20 loans totalling £150m, averaging £7.5m per SME developer loan.
The second phase of the alliance introduces ten new sustainability criteria, with developers required to meet at least four to receive a 1.25% interest rate discount. Meeting six or more criteria qualifies developers for a 2% discount.
These criteria comprise the use of modern construction methods and the payment of a ‘real living wage’ to workers on-site, as well as support for the Lighthouse Charity, which focuses on mental health within the construction sector.
To be eligible for alliance funding, developers must meet key performance indicators, ensuring that all homes built are fossil fuel-free and maintain an average SAP score of at least 85.
Homes England chief investment officer Marcus Ralling said: “Small and medium house builders 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 house builders that are crucial to building a diverse and resilient housing sector.”
Octopus Real Estate debt co-head Andy Scott 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.”
On Monday (1 April), Homes England agreed to acquire the Broad Marsh site from Nottingham City Council, signalling a significant step towards the city’s regeneration.
