L&Q has secured a £525m sustainability linked funding package from Lloyds Bank to support the housing association’s target of building 8,000 new homes by 2024, of which 50% will be affordable.
The deal will transition the association’s existing funding to a sustainability linked loan, L&Q’s largest to date. It will be used to deliver more sustainable, affordable housing, reduce its scope one and two emissions by 20% by 2024 and achieve its ambitions to hit net zero by 2050.
The funding, which is the largest sustainability linked facility Lloyds Bank has provided the UK housing sector to date, offers margin discounts based on L&Q achieving two key performance indicators (KPIs).
The first KPI is to achieve an average EPC C rating on all homes by April 2024, reducing carbon and lowering fuel costs for residents. This will complement the association’s five-year plan to develop an L&Q-led design standard which meets the Government’s Future Homes Standards.
The second KPI requires that half of the planned 8,000 new homes L&Q build by 2024 will be ‘affordable’ (Affordable Homes Definition: Housing and Regeneration Act 2008) and acts as interim progressive targets to achieving its longer term aims of delivering 30,000 new homes by 2030.
As one of the leading social housing associations in the UK, L&Q serves around 250,000 people in more than 105,000 homes, primarily across the South East and London. L&Q also recently signed up to industry-led Sustainability Reporting Standards for Social Housing, which covers 48 criteria including net zero targets, affordability and safety.
Martin Watts, Director of Treasury Finance at L&Q, said: “We are committed to making our operations more sustainable and doing our part to improve the provision of affordable housing across the UK.
“This funding will help us on our net zero journey, allow us to achieve the objectives of our corporate strategy and have a positive impact on our residents. Only by working closely with finance providers will we create a more sustainable sector, and we are committed to doing that alongside Lloyds Bank.”
Chris Yau, Director of Sustainability & Origination at Lloyds Bank, commented: “Tackling climate change is a challenge that housing associations must face in to as they both 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. We look forward to continuing to collaborate with L&Q as they work towards their goals.”
Header image shows L&Q’s Barking Riverside development site.
