£1 billion to retrofit social housing
The NWF has announced financial guarantees that will see Barclays UK Corporate Bank and Lloyds Banking Group deliver £1Bn of funding to accelerate the retrofit of social housing in the UK.
Barclays UK Corporate Bank and Lloyds Banking Group will each deliver £500M of lending to the market that has been enabled by financial guarantees of up to £750M provided by the NWF. The guarantees will support both shorter duration loans to be provided by Lloyds Banking Group and mid-to-long duration loans to be provided by Barclays UK Corporate Bank, ensuring that financing will cater to every aspect of the social housing market.
The NWF will help create a stable investment environment by mobilising private capital around the Government’s strategic priorities, enabling the market to invest with confidence in clean energy and growth industries. These deals showcase how innovative public and private expertise can come together to deploy private capital to deliver warmer, greener homes for social tenants.
Not only will the flexible and competitively priced loans support housing associations to meet their net zero ambitions, they will also improve the quality of life for their residents. Improvements such as low carbon heating and insulation create warmer homes, lower bills and better life outcomes.
While housing association homes are on average the most energy efficient of any tenure, around 39% of socially rented homes have an EPC rating below C. Social housing represents almost 15% of all homes in fuel poverty in the country and 10% of total housing emissions for the UK. It is estimated that close to £36B of investment will be needed to fully decarbonise housing association properties, according to the National Housing Federation.
The development of these guarantees with Barclays UK Corporate Bank and Lloyds Banking Group forms part of ongoing efforts by the NWF to improve financing to the social housing sector, 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), a mutual funder to the sector, for a further £150m to help more registered providers gain access to longer term bond markets, which is expected to be announced in due course.
As social housing is concentrated under registered provider ownership, retrofit of these properties can be rolled out at scale faster than those in other forms of tenure, meaning investment in the sector can have an important role in helping the UK reach its net zero ambitions.
Chancellor of the Exchequer Rachel Reeves MP said: “This is exactly the kind of investment we want to see to grow our economy, after the International Investment Summit that secured over £60Bn of investment into the UK. 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.”
John Flint, National Wealth Fund CEO, 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.”
Charlie Nunn, Chief Executive at Lloyds Banking Group, 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. We have a significant role to play as one of the UK’s largest retail and commercial banks, and are proud to work in partnership with the National Wealth Fund to accelerate the retrofit of social housing. Through a blended finance solution, we are enabling housing associations to improve energy-efficiency and cost-effectiveness for residents – improving health, work and homelives. We’ll continue working across the housing sector to help increase the provision of safe, sustainable homes.”
Matt Hammerstein, Chief Executive of Barclays UK Corporate Bank, 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. Globally, we have committed to facilitate $1 trillion in sustainable and transition financing by the end of 2030; today’s partnership is one example of how we are seeking to mobilise this, and help our clients access the financing they need.”
The UK Infrastructure Bank became the NWF on 14th October. The new NWF will expand UKIB’s remit beyond infrastructure in support of the Government’s industrial strategy. With additional financial capacity and an enhanced risk budget, the NWF will be capitalised with £27.8bn to catalyse private investment in the market.
