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New National Wealth Fund backs major banks to unlock £1bn for social housing retrofit
The National Wealth Fund (NWF) and two major UK banks have announced plans to release £1bn of funding to accelerate social housing retrofit in the UK.
Under the retrofit funding plan, Barclays and Lloyds Banking Group will each deliver £500m of lending backed by guarantees of up to £750m provided by the NWF.
The guarantees will support shorter duration loans to be provided by Lloyds and mid to long duration loans to be provided by Barclays.
It is the first such announcement since chancellor Rachel Reeves announced that the UK Infrastructure Bank would become the NWF.
Ms Reeves said: “This is exactly the kind of investment we want to see to grow our economy, just days after the International Investment Summit that secured over £60bn of investment into the UK.
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“And this is only the start. With £27.8bn in total, the NWF will unlock tens of billions more in private investment, fuelling growth across the UK and making a real difference in people’s lives. We promised change, and we are delivering it.”
The development of these guarantees with Barclays and Lloyds forms part of the NWF’s ongoing effort to improve financing to the social housing sector, which is described as “a fundamental pillar of the government’s Warm Homes Plan”.
An agreement in principle has also been made between the NWF and The Housing Finance Corporation (THFC) for a further £150m to help more registered providers gain access to longer-term bond markets. More information on this deal is expected soon.
It is hoped that this mobilisation of private capital will deliver flexible and competitively priced loans to support housing associations to meet their net zero ambitions, as well as improve the quality of life for their residents.
John Flint, chief executive of the NWF, said: “We know there are significant barriers to investment in the heat and buildings sector, despite it being a critical element of the UK’s net zero transition.
“By working with Lloyds Banking Group and Barclays to bring competitive offers to the market, we are helping registered providers access the attractive financing that they need to implement critical retrofit measures, reducing bills and improving comfort for social housing residents across the UK.”
It is estimated that around 39% of socially rented homes have an Energy Performance Certificate (EPC) rating below C. At the same time, social housing makes up almost 15% of all homes in fuel poverty in the country and 10% of total housing emissions for the UK.
The government believes that £36bn of investment will be needed to fully decarbonise the sector and bring housing association properties up to EPC C by 2030.
At the end of last month, energy security secretary Ed Miliband announced that he would consult plans for all rented homes, including social homes, to achieve an EPC rating of C by 2030.
Charlie Nunn, chief executive of Lloyds, said: “Decarbonising our housing stock is critical for the transition to a low-carbon economy, and there is urgent need for good-quality, greener homes which are warmer and more affordable to maintain.
“Through a blended finance solution, we are enabling housing associations to improve energy efficiency and cost-effectiveness for residents – improving health, work and home lives. We’ll continue working across the housing sector to help increase the provision of safe, sustainable homes.”
Matt Hammerstein, chief executive of Barclays, said: “Our partnership with the NWF represents a significant milestone for the social housing sector and is an exciting example of the types of innovations which will be crucial to decarbonising the UK.”
Lloyds and THFC had spoken of plans for such a government-backed retrofit fund at the the Housing Community Summit in Liverpool last month, without revealing the amount of funding they hope to unlock.
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