Residential developers who meet green standards can now access a new Green Homes Incentive that will help deliver more thermally efficient and lower carbon homes in Wales.
Funded by the Welsh Government, the Green Homes Incentive is available on residential development loans from Development Bank’s Wales Property Development and Wales Stalled Sites Funds and includes a reduction in loan repayment fees 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/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.
The latest RICS data (2020) shows 77% of all new builds in Wales achieved an EPC B rating, with only 5% achieving an A rating. Additional insulation, double/triple glazing and solar panels can all help to improve EPC ratings.
It is also widely accepted that alternative structures such as timber frames, hempcrete blocks, limecrete blocks and mycelium bricks have a lower carbon impact than concrete. The use of timber frames has become more commonplace over the last decade but recent global pressures on timber cost and availability have led to a number of developers reverting to concrete hence the need for financial incentives.
Developers that 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 during the life of a property.
Minister for Climate Change, Julie James said:
Tackling the climate emergency must be at the heart of everything we do in Wales as we all work together across this decade of action.
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:
Sustainable business is at the heart of our core principles, so we want to support developers making the change to greener development practices as part of the Team Wales effort to build a stronger, greener economy.
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. Our dedicated property team is here to help with a quick decision-making process that is designed to get more developers building greener housing as quickly and efficiently as possible.
Cardiff-based developers Wellspring Homes hope to use the Green Homes Incentive for their next development. Using local contractors, the company is close to completing the construction of its first property built using Hempcrete, a natural ‘better than zero carbon’ material that is breathable. Planning permission has been granted for their next development in Neath that will feature eight low-carbon homes. With an A grade energy rating, all will have solid wall construction using Hempcrete and will be fitted with air source heat pumps.
Director Hadleigh Hobbs said:
We’ve got an opportunity to build housing differently in Wales by using more innovative methods of construction to deliver the next generation of living space. Each one of our homes is being built using solid Hempcrete walls. This gives really good thermal mass with its unique properties helping to store and release heat from the building’s walls, limiting fluctuations in temperature, reducing energy costs and virtually eliminating condensation by releasing internal moisture. The use of hemp within the walls also locks up carbon dioxide in the structure of the building.
However, funding is essential for our industry if we’re going to scale-up and deliver more low carbon homes in Wales. This is what will enable us to refine the technology and make the homes of the future commercially viable. The Development Bank understands this challenge and is now able to offer the support needed to drive down carbon emissions with the development of new homes that are well-built, beautiful to live in and beneficial to our natural environment.