As we head towards the Net Zero 2050 target, people are adopting a more sustainable way of life. For many, this has been through changing their habits, such as swapping a petrol or diesel-powered vehicle for an electric one to reduce individual carbon emissions or looking to fit their homes with solar panels.

With housing such a key contributor to the UK’s carbon emissions, developers are also clearly having to play their part. As we know, the Future Homes Standard is expected to be introduced next year with the target of reducing carbon emissions from new homes by between 75% and 80%.

How a new Government will affect the implementation of the Future Homes Standard is yet to be seen, but the direction of travel is clear – homes must be greener.

The industry is moving in the right direction. A record 10,722 new domestic dwellings in England and Wales achieved an EPC A rating last year, 4.5% of all completions. That was up from 2.9% in 2022 and the 1,020 EPC A homes completed a decade previously.

Additionally, 80% of homes completed last year achieved an EPC B rating, although 3.6% were at EPC D or below.

As a lender, we’re having more frequent conversations with developers about funding more sustainable properties, incorporating measures such as solar panels, air source heat pumps, high levels of insulation and EV charging stations.

Incorporating some of these into homes will make the property more energy efficient, ultimately keeping running costs lower. This has been more important than ever since the cost of energy bills soared in 2022, making running a household much more costly.

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While ESG-led developments are pretty standard in new developments, we’re now seeing this more in retrofit or conversion projects too.

Developers are taking on older buildings with low EPC ratings, or properties that were previously used for different purposes such as office blocks, and refitting them to make them more energy efficient.

It's important as the landscape in the market changes that lenders look to work with developers that want to create sustainable schemes.

We don’t just mean simply funding the developments as most will do this as a matter of course as green housing schemes become the new norm. Instead, lenders need to support these developers by offering incentives to create projects like these, helping to stimulate the future of the industry.

For example, we launched a Green Homes Initiative enabling developers that build projects with 80% of homes achieving an EPC rating of A, with any remaining being at least EPC C standard, to receive a 50% reduction on loan fees.

Since its launch in 2021, we’ve seen high levels of interest in the initiative, and we anticipate this kind of scheme will only grow in popularity. Initially launched as a £100m fund, we recently extended this to £300m on the back of strong levels of developer interest.

Of course, many developers in the industry build these homes regardless of incentives and we hope that this scheme and others out there will support them to deliver high-quality, environmentally friendly homes to the market.

However, it’s important that lenders continue to offer these incentives and support developers to create sustainable housing.