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The UK’s National Wealth Fund (NWF) is stepping up its commitment to sustainable housing, guaranteeing £250 million in loans to enhance energy efficiency in hundreds of thousands of homes. This initiative aims to attract bond investors and accelerate the government’s climate objectives.
In its latest move, the NWF has underwritten an initial £150 million in loans from The Housing Finance Corporation, financed by Rothesay. An additional £100 million is planned over the next six months. This brings the fund’s total underwriting for social housing retrofits to £1 billion, following its previous £750 million backing of loans from Lloyds and Barclays.
“Retrofit is hugely important for us; if we are going to decarbonise the economy, you need to generate electricity without making carbon, and you need to stop all of the heat leakage out of houses and also get them to heat their own homes with things other than gas,” said Ian Brown, head of banking and investing at the National Wealth Fund.
The loans, directed to housing associations, will support renewable energy installations, low-carbon heating, insulation upgrades, and water efficiency improvements.
“We’re trying to get more bond investors like Rothesay to provide more financing to the sector . . . this is an example that hopefully we can scale because the task at hand to retrofit is so vast,” said Priya Nair, chief executive of THFC, who added that the deal marked the first time an insurer had made loans exclusively to fund retrofitting.
The financing gap is widening as the UK’s social housing sector requires over £30 billion in upgrades to meet 2030 government deadlines. Housing associations are also grappling with expensive cladding replacements post-Grenfell and stricter maintenance standards under Awaab’s Law. These financial strains have contributed to a slowdown in new affordable housing development.
Historically, government intervention in rent-setting has made it harder for housing associations to secure low-cost borrowing. To address this, ministers have proposed a five-year rent settlement, with a consultation underway to extend it to 10 years.
Rebranded from the UK Infrastructure Bank last October under the Labour government, the NWF now has a broader mandate to invest in industrial strategy. Its budget was expanded from £22 billion to £28 billion, yet only £4.5 billion has been deployed.
NWF Chief Executive Brown expects the full £28 billion to be allocated by the end of this parliamentary term, with at least £10 billion in guarantees to other financial institutions.
“I am very happy with the pace we are deploying . . . what’s really important is we only do it where we are needed,” Brown said
Additional NWF investments this year include:
£92 million loan to Denbighshire County Council for coastal flood defenses.
£55 million equity investment in EV charging firm Connected Kerb.
£43.5 million equity investment in sustainable packaging company Pulpex.
With this latest financing push, the NWF reinforces its role in the UK’s transition to a greener, more sustainable economy.
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