Welsh Government opens £33m green funding line

Residential developers can now access an incentive to help them deliver more thermally efficient and lower carbon homes in Wales.

Funded by the Welsh Government and run through the Development Bank of Wales, the Green Homes Incentive is available on loans from the bank’s Wales Property Development and Wales Stalled Sites Funds, and includes a reduction in loan repayment of up to 2%.

Finance for up to 100% of building costs is available with interest rolled-up throughout the loan term. Eligibility will depend upon qualifying criteria that includes EPC A Rating or Passivhaus status, non-concrete structures and non-fossil fuel heating systems.

The operation of buildings accounts for around 30% of emissions in the UK, mainly from heating, cooling and electricity use. For new buildings, the embodied emissions from construction can account for up to half of the carbon impacts associated with the building over its lifecycle.

According to RICS data from 2020, 77% of all new builds in Wales achieved an EPC B rating, with only 5% achieving an A rating. Additional insulation, double or triple glazing and solar panels can all help to improve EPC ratings.

Alternatives to concrete, such as timber frames, hempcrete blocks, limecrete blocks and mycelium bricks are also being encouraged, although it is acknowledged that global pressures on timber pricing is a concern.

The bank added that developers looking to install non-fossil fuel heating systems will also be able to benefit from the new incentive as ground and air source heat pumps significantly reduce operational energy demand.

Minister for climate change Julie James said: “The Green Homes Incentive will support SME housebuilders in delivering low carbon homes, part of our journey to a Net Zero Wales by 2050.

“Finding innovative ways to improve the energy efficiency of new homes will also bring down costs for homeowners which is crucial as we help people through a cost of living crisis.”

Giles Thorley, chief executive of the Development Bank, said: “Our Green Homes Incentive offers reduced lending costs for housing schemes that will help to deliver more thermally efficient and lower carbon homes in Wales.

“It’s the first of several initiatives as we look to support the journey to net zero with funding that helps forward-thinking companies to address climate change.”

Cenydd Rowlands, property director at the Development Bank, said: “We are already seeing examples of developers wanting to make the change towards more eco-friendly options particularly given the upcoming changes in building regulations which are likely to impose higher eco-standards across all new schemes.

“We know the importance developers place on certainty of funding.  This has become even more important of late given the additional uncertainties around other key elements of development, such as supply availability and material cost inflation.”