Decarb Captial
Our Decarb Capital service enables UK housing associations and local authorities gain institutional capital to fund affordable housing and retrofit programmes, to meet the legislative requirements of Net Zero 2030/2050, Decent and Future Homes Standards.
Our platform facilitates joint ventures to fund and deliver UK affordable housing. Our institutional partners forward fund new housing programmes on land which is owned by housing associations and local authorities.
For retrofit programme funding, our institutional partners pay upfront capital. The amount of capital is based on the specified portfolio’s rental income and term (typically 30-years). It funds initial and ongoing retrofits works, with the remaining balance available for other funding needs. Housing associations retain a portion of the rental income and maintain residents’ right to buy. Security can be transferred to other properties during the term.
Benefits
Gain upfront scale capital and certainty of funding cost for residential retrofit programmes, whilst retaining long-term ownership.
- Comply with Net Zero and Decent Homes Standard legislation
- Avoid ‘dead asset’, loss of income, provision of alternative accommodation and potential property decay
- Use capital to as part of a wider Strategic Asset Management Strategy, lower maintenance costs, increase asset value and operating margins
- Assist property development programme
- Improve EBITDA-MRI, credit profile, reserves and liquidity
- Residents retain their right to buy. Security can be moved to other property throughout term
- Increase tenant satisfaction with increased comfort levels, lower energy bills, better quality housing
Capital requirements
To achieve Net Zero by 2050, 29 million UK homes must be retrofitted. The scale of capital required is daunting, conservatively estimated at £110bn for retrofit for housing associations alone. Registered providers are already under financial strain from fire safety remediation costs of £10bn, AWAAB’s Law, and the increasing cost of repair and maintenance/major works on existing stock which rose by 13% in 2023/24 to a total of £8.8bn.
Additionally, pressure on loan covenants and credit quality, coupled to declining interest cover due to increased costs, has made many potential development schemes unviable, leading to scaled back pipelines, loss of potential income and increased shortfall in housing needs.
Private capital is required to help meet these financial challenges.
Decarb Capital is the cost-effective institutional funding solution for housing associations and local authorities to help decarbonise and increase their housing portfolios, reduce fuel poverty and assist wider funding requirements.
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