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Homes England invests £150m in Greener Homes Alliance phase two

Homes England has partnered with Octopus Real Estate, part of Octopus Investments, to launch the Greener Homes Alliance phase two.

The alliance will commit £150m of funding, £42m of which will be provided by the Agency’s Home Building Fund.

This aims to provide small and medium-sized (SME) housebuilders with increased 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 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 £150m – an average loan size to SME developers of £7.5m.

Phase two of the Greener Homes Alliance will seek to support the creation of more sustainable homes by introducing 10 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 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, 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.”

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