Lawyers welcome new fund for social housing retrofit

Specialist social housing lawyers have welcomed news that the National Wealth Fund (NWF) and two major UK banks have plans to release £1bn of funding to accelerate social housing retrofit in the UK.

The retrofit funding plan will see Barclays and Lloyds Banking Group deliver £500m of lending each, backed by guarantees by the NWF of up to £750m, and will aid housing associations in meeting their net zero ambitions.

The social housing team at national law firm Clarke Willmott LLP, has backed the announcement, which they hope will have a positive impact on social housing tenants both in terms of finances and quality of life.

Bethan Evans, a partner and banking and finance lawyer at Clarke Willmott, said: “It’s good to see funding being made available specifically for retrofit. 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.

“This emphasis on improving energy efficiency echoes the rising popularity of ESG-linked loans in the past decade. Social housing providers were some of the first to benefit from reduced margins for improving their ESG credentials.

“We anticipate that the funding will be available on a relatively standardised basis, which should mean that it is comparatively quick to deploy where it is needed.”

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 housing association properties have an Energy Performance Certificate (EPC) rating below C and around £36bn of investment will be needed to bring these homes up to EPC C by 2030.

Bethan continued: “A consideration for lenders and is how easily the funding can be deployed in practice, particularly in relation to older stock, which in some cases is not so easy to upgrade to modern standards.

“Lenders should also take care to ensure that this new funding does not cut across any of their existing finance arrangements, which might mean looking at their existing agreements and security to confirm that there is no conflict with the retrofit financing. The government guarantees should help here, in ensuring that LTV covenants for existing arrangements are not stretched.”

Bethan Evans acts for lenders and borrowers on commercial funding transactions with a particular specialism in property development finance, third sector lending and social housing finance.

Clarke Willmott’s social housing team is one of the largest in the UK acting for over 100 Registered Providers as well as major frameworks.

Clarke Willmott is a national law firm with offices in Birmingham, Bristol, Cardiff, London, Manchester, Southampton and Taunton and is this year celebrating its 135th anniversary.

For more information visit Leading Solicitors To Social Housing Providers – Clarke Willmott