Largest Sustainability Loan Secured For Affordable Housing Project
Housing association L&Q has secured its largest-ever sustainability-linked loan, worth £525m, to build 8,000 homes. Housing Industry Leaders looks at the funding and how it aims to deliver more affordable housing.
Agreed with Lloyds Bank, the funding will be used to deliver more sustainable and affordable housing, the housing association hopes to reduce its scope one and two emissions by 20 per cent by 2024, with half of the 8,000 new homes will be affordable.
L&Q’s existing funding will be transitioned to a sustainability-linked loan, and this loan is the largest one of its kind secured by the group and offered by Lloyds Bank to the UK housing sector.
About 250,000 people have been served by L&Q in more than 105,000 homes as one of the largest housing associations in the UK, with it primarily working across London and the South East.
The Project Is Part Of Long-Term Goal Of 30,000 Homes By 2030
Under the terms of the deal, the funding will offer margin discounts, based on L&Q achieving two key performance indicators (KPIs).
The first KPI focuses on the company achieving an average EPC C rating on all homes by April 2024, which will reduce carbon and lower fuel costs for residents.
While the second requires that half of the planned 8,000 new homes that L&Q builds by 2024 will be affordable, acting as an interim target of its longer-term ambition to deliver 30,000 homes by 2030.
Lloyds Bank Director of Origination & Sustainability, Chris Yau, said: “Tackling climate change is a challenge that housing associations must face as they modernise existing portfolios and build the homes required to tackle shortages.
Sustainability-linked loans support housing associations like L&Q to achieve their ambitions – providing the funding they need and rewarding them for meeting targets that benefit their customers and the environment.
Safety Is An Essential Focus Of The SRS Standard
It comes after L&Q recently signed up to the industry-led Sustainability Reporting Standard for Social Housing (SRS), which covers 48 criteria, including net zero targets, affordability, safety and resident voice.
SRS was launched in November 2020 and was set up in response to concerns that ESG investment in social housing was being inhibited by the absence of a common reporting standard.
As with many other sectors, there had been a multitude of ESG reporting frameworks, resulting in reporting that lacked transparency and was prone to inconsistency.
In addition to this, it was apparent that many housing providers were not being asked to report on ESG criteria not relevant to the social housing sector.
An essential aspect of the standard is safety and it was outlined in The ESG Social Housing Working Group’s ‘The Sustainability Reporting Standard for Social Housing one year in, the story so far’ document, over 99 per cent of homes managed by the reporting housing providers have the relevant in-date gas and fire safety certifications, and 99.75 per cent of the homes managed by reporting housing providers meet the Decent Homes Standard.
Reducing carbon emissions and seeing more affordable housing, will benefit people, especially during the cost of living crisis. The funding will help support L&Q in providing its people with good quality, safe, affordable homes.
