Barclays and Lloyds announce new £1bn retrofit fund

£1 billion of investment from the private sector has been allocated to accelerate the retrofit of thousands of social homes in the UK. 

Inside the deal: Barclays UK Corporate Bank (Barclays) and Lloyds Banking Group (Lloyds) will each invest £500 million in the market, enabled by a financial guarantee of up to £750 million provided by the new National Wealth Fund (NWF), formerly UK Infrastructure Bank.   

The deal aims to create “a stable investment environment” for the social housing market, by “mobilising private capital” around public sector strategic priorities – including “flexible and competitively priced loans” so housing associations can meet their net zero targets while providing warmer, energy-efficient homes for social tenants. 

The financing includes shorter duration loans from Lloyds and mid- to long-term loans from Barclays. 

Further, an Agreement in Principle (AIP) has been struck between the NWF and The Housing Finance Corporation (THFC), a mutual funder to the sector, for a further £150 million to help more registered providers gain access to longer term bond markets, which is expected to be announced in due course. 

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 £60 billion of investment into the UK.  

“And this is only the start. With £27.8 billion 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.” 

While housing association homes are on average the most energy efficient of any tenure, around 39 per cent of socially rented properties have an EPC rating below ‘C’. 

Social housing represents almost 15 per cent of all homes in fuel poverty in the country and 10 per cent of total housing emissions for the UK.  

It is estimated close to £36 billion of investment will be needed to fully decarbonise housing association properties, according to the National Housing Federation. 

NWF CEO, John Flint, 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.” 

The UK Infrastructure Bank became the NWF on 14 October. The government-backed vehicle will expand UKIB’s remit beyond infrastructure in support of the government’s industrial strategy, with additional financial capacity and an enhanced risk budget. 

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