Homes England and Octopus Real Estate embark on £150m partnership

The first phase of the alliance launched in 2021, as part of efforts to expand the supply of finance available to SMEs, and funded over 550 new sustainable homes across the country.

Over 40 per cent of the homes built during phase one achieved an Energy Performance Certificate (EPC) rating of Band A, and all of the homes secured a Standard Assessment Procedure (SAP) score higher than 86. This is higher than the UK average EPC rating of D and SAP score of 67.

Homes England said phase one of the Greener Homes Alliance made a “significant” impact, with 20 loans totalling £150m completed.

Phase two of the Greener Homes Alliance will seek to support the creation of more sustainable homes by introducing 10 new criteria. Four of these must be met for developers to benefit from a 1.25 per cent discount on their interest rate. If six or more are met, developers will be eligible for a two per cent discount.

The new criteria for phase two will include the use of modern methods of construction in the fabric of buildings and a real living wage paid to workers on site. It will also encourage borrowers to support the Lighthouse, a mental health charity in 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.

Commenting on the announcement on 2 April, Marcus Ralling, chief investment officer of Homes England, 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.”

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.”

In November, Homes England entered into a long-term public-private partnership with social housing investor the Pension Insurance Corporation and nationwide placemaker Muse to deliver 3,000 energy-efficient affordable homes.