Homes England and Octopus Real Estate launch £150 million 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) house builders with further loan finance enabling even more high-quality, energy efficient homes to be built across England.

Phase one of the Greener Homes Alliance, launched in 2021, made a significant impact, with 20 loans completed totalling £150 million — an average loan size to SME developers of £7.5 million. 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 two of the Greener Homes Alliance will seek to support the creation of more sustainable homes by introducing 10 new criteria, 4 of which must be met for developers to benefit from a 1.25% discount on their interest rate. If 6 or more criteria are met, developers will be eligible for a 2% discount.

To qualify for funding from the alliance, 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.”

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