Lloyds Bank has committed to lending £1bn as part of a revolutionary move to incentivise developers to improve the green credentials of their buildings.
Loans issued to property owners as part of the scheme will become up to 20bps cheaper once the improvements have been made.
Minimum ticket sizes of £10m will be issued for predominantly refurbishment projects, and the reduction in cost will kick in once a checklist of credentials are met. The structure of the loans will otherwise remain the same as those ordinarily issued by Lloyds and will be on terms of between three and five years.
The refurbishment projects and improvement in sustainability credentials should increase the value of the properties that Lloyds will be lending against.
The bank estimates that, based on an average four-year loan term, the initiative could provide savings of 110,000 tonnes of carbon emissions, which is equivalent to the annual energy usage of more than 22,000 households.
The checklist of credentials has been put together with environmental consultancy Trucost and the offer is expected to appeal to landlords positioning their buildings in “the upper quartile” in terms of sustainable credentials. It is not designed to fund remedial improvements to the worst performing buildings.
John Feeney, global head of commercial real estate at Lloyds, said: “We are seeking to incentivise those who can get their assets into the most efficient space. More often than not that is going to be those assets that are reasonably well performing and where investment in reasonably easy wins could get to a much more efficient place.”
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