Lloyds and Barclays to provide £1bn in retrofit funding backed by National Wealth Fund guarantees

UKIB became the NWF on 14 October. The new NWF will expand UKIB’s remit beyond infrastructure in support of the new government’s industrial strategy.

It aims to mobilise private sector capital into investments across the UK, while aligning with its shared goals of economic growth and tackling climate change. 

David Cleary, managing director and head of housing at Lloyds Banking Group, previously revealed at the Housing Community Summit in Liverpool last month that the bank was “very close” to announcing a retrofit funding scheme that would be partly backed by UKIB.

The NWF also said that an agreement in principle has been made between the fund and social housing debt aggregator The Housing Finance Corporation (THFC) for a further £150m to help more registered providers gain access to longer-term bond markets.

The partnership is expected to be announced in “due course”, according to the NWF.

THFC previously said when launching its new strategy in September that it was continuing to work on a partnership with UKIB to launch a new financial debt guarantee for retrofit funding.

Social Housing first reported in March that UKIB was collaborating with the aggregator and other lenders to support retrofit funding in the sector. 

Commenting on the latest announcements, chancellor Rachel 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.

“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, chief executive of the NWF, said that the partnership with Lloyds and Barclays will help registered providers access the “attractive financing” they need to retrofit their stock.

“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,” he said.

“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.” 

Matt Hammerstein, chief executive of Barclays UK Corporate Bank, which hired a new head of social housing in April, said that the partnership with the NWF represents a “significant milestone” for the sector.

He said it is an “exciting example” of the types of innovations which will be crucial to decarbonising the UK.

“Globally, we have committed to facilitate $1tn 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,” Mr Hammerstein said.

Last month, the government renamed Wave 3 of the Social Housing Decarbonisation Fund the Warm Homes: Social Housing Fund and opened it to applications.

It will support the social housing sector to upgrade stock currently below Energy Performance Certificate (EPC) Band C up to that standard.

Within the announcements, the government said it will “now shortly consult” on proposals for private and social rented homes to achieve EPC Band C or equivalent by 2030, as promised in its manifesto.