Lawyers applaud £1bn retrofit fund launch

Specialist social housing lawyers have shown strong support for a £1 billion funding initiative, led by the National Wealth Fund (NWF) alongside Barclays and Lloyds Banking Group, aimed at accelerating the retrofit of social housing properties across the UK. This funding plan will provide £500 million in lending from each bank, backed by NWF guarantees of up to £750 million, enabling housing associations to invest in necessary upgrades to improve energy efficiency and work toward net zero goals.

The social housing team at Clarke Willmott LLP, a national law firm known for its expertise in social housing finance, has backed the announcement, citing its potential positive effects on both social housing tenants and housing providers. Bethan Evans, partner and banking and finance lawyer at Clarke Willmott, noted the significance of the funding for social housing providers, which typically face financial constraints balancing rising operational costs and their commitments to expand affordable housing stock. "Social housing providers have faced rising costs, and their existing funding is needed for expanding their stock and building new social homes; this funding will be ringfenced for improving existing homes and should have a positive impact on the lives of tenants,” said Evans.

This initiative is expected to support upgrades in housing association properties, which will reduce energy costs for tenants and improve the overall living quality for residents. With around 39% of these properties currently holding an Energy Performance Certificate (EPC) rating below C, it is estimated that £36 billion of investment is required to bring these homes up to EPC C by 2030. John Flint, CEO of the NWF, reinforced the importance of retrofitting for the UK's net zero ambitions, stating that the initiative is intended to ease access to necessary financing for critical upgrades, ultimately reducing utility bills and improving comfort for residents.

The initiative highlights the increased popularity of ESG (Environmental, Social, and Governance)-linked loans in recent years, which offer social housing providers reduced lending margins when they meet specified sustainability goals. The availability of standardised funding options could also streamline the financing process, allowing funds to be deployed efficiently where needed.

Bethan Evans noted potential logistical challenges, especially with older housing stock, which may present unique retrofit difficulties. She also emphasised that lenders should examine existing financial arrangements to prevent conflicts with the new funding, which may require review of current agreements. However, government-backed guarantees within this fund should help alleviate such concerns by ensuring compliance with loan-to-value (LTV) covenants on previous financing arrangements.

With over 100 registered housing providers as clients, Clarke Willmott’s social housing team is among the largest in the UK, providing specialised legal guidance for social housing finance and third-sector lending. This year, Clarke Willmott celebrates its 135th anniversary, reflecting a longstanding commitment to supporting housing providers nationwide in achieving sustainable housing goals.