Homes England and Octopus Real Estate launch £150m Greener Homes Alliance phase 2

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 alliance will commit £150 million of funding, £42 million of which will be provided by the Agency’s Home Building Fund. This will provide small and medium-sized (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 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.

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+

About Homes England 

We are the government’s housing and regeneration Agency, and we’re here to drive the creation of more affordable, quality homes and thriving places so that everyone has a place to live and grow.  

We make this happen by working in partnership with thousands of organisations of all sizes, using our powers, expertise, land, capital and influence to bring investment to communities and get more quality homes built. 

Learn more about us: https://www.gov.uk/government/organisations/homes-england/about

Press Office Contact Details 

Email: media@homesengland.gov.uk 

Phone: 0207 874 8262 

About Octopus Real Estate

Octopus Real Estate, part of Octopus Investments, is a specialist real estate investor and lender delivering quality, sustainable places to live for every stage of life. Through our role as an investor, lender, and landlord, we fund the entire lifecycle of real estate ─ reimagining its future.

We have more than £3.7bn in real estate assets and secured lending, working with our partners to deliver greener homes for people to buy or rent, increase the supply of genuinely affordable housing, and build communities that meet the aspirations of elderly people. We also transform underused land and properties that require regeneration and redevelopment.

We believe that real, lasting change can only be achieved if businesses invest in the right way. We work with people who share our values and take our responsibilities to the communities we serve seriously. Together, we’re harnessing change to build a better tomorrow.

About Lighthouse

The Lighthouse Construction Industry Charity is the only charity that provides emotional, physical and financial wellbeing support to the construction community and their families.

Our mission is to ensure that our construction community can easily access the emotional, physical and financial wellbeing support they need and to develop healthy and sustainable futures for this generation and the next.