Lenders set to launch government-backed retrofit fund

“It’s the government arm using its guarantee scheme to enable us to lower the cost of capital and lend more cheaply into the sector,” he added.

THFC said in a statement that it is “exploring a number of exciting new partnerships, particularly where we can bring in out-of-sector knowledge and expertise”.

It said the new financial debt guarantee with UKIB “will provide housing providers with access to competitive unsecured funding for retrofit projects”, with more information to be provided soon.

Discussing the best investment options in 2024 at a panel on 9 September along with Mr Cleary, Priya Nair, chief executive of THFC, said retrofit funding is “where the creativity has to come in”.

Options include finding “the mechanism to make the cost of capital cheaper, because there isn’t this income stream or cash flow return” or “financing with returns-based incentives or results-based outcomes, such that the cost of capital can be reduced”, Ms Nair said.

Discussing the sector’s financing as a whole, Mr Cleary also said there is only around “£15bn capacity of debt capacity left in its current guise”.

“We can’t keep doing what we do, and therefore we need to have change,” he added, noting that the sector’s debt had quadrupled in 20 years to £100bn.

This week Lloyds revealed a new partnership with Barratt and Homes England to build large-scale residential developments. The MADE partnership will see each party invest up to £150m each in equity funding.

THFC also announced its highest pre-tax surplus in its 37-year history, as it set out a “refreshed” corporate strategy.

The affordable housing aggregator’s annual results to 31 March 2024 showed a £7.95bn loan book and a pre-tax surplus of £8m.

THFC said that its results take its reserves to more than £62m, representing a more than doubling over the past seven years.

The affordable housing aggregator and mutual lender was founded in 1987 to introduce private capital to the sector.