Homes England and investment giant reveal £150m fund for SME house builders
Homes England and Octopus Real Estate will lend £150m to small and medium-sized (SME) house builders.
The government’s housing and regeneration agency has relaunched a partnership with the investment giant that focuses on supporting SME builders with loan finance and encouraging green building practices.
Of the £150m funding committed, a total of £42m will be provided by Homes England’s existing Home Building Fund, which helps SME house builders to finance developments.
The new project is called Greener Homes Alliance 2. It follows on from Homes England and Octopus’s previous alliance launched in 2021, which funded 550 new homes, over 40% of which achieved an Energy Performance Certificate (EPC) rating of A.
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Phase two of the alliance will introduce 10 new criteria for developers to aim for. House builders that meet four criteria will receive a 1.25% discount on their interest rate, while those that meet six or more will be eligible for a 2% discount.
The new criteria include: more than 25% of units to be affordable built on-site, or in line with local social housing plans; an average Standard Assessment Procedure (SAP) score of 92+, or EPC A rating; and biodiversity net gain of over 20%.
Use of modern methods of construction in the fabric of buildings and paying a real living wage to workers on site also count in builders’ favour.
Other criteria encourage builders to regenerate brownfield sites, reduce water usage in homes, make over half of new homes zero-bills ready and support charity Lighthouse, which focuses on mental health in the construction industry.
To qualify for funding from the alliance in the first place, 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 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 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, said: “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.”
He continued: “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.”
Last month, Inside Housing interviewed Homes England chief executive Eamonn Boylan, who said the agency needed to combat perceptions of being “sometimes difficult to deal with”. He also suggested that Homes England could “incubate” the government’s proposed new towns through land assembly and de-risking.
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