The £150m pot will provide SME house builders with further loan finance for high-quality, energy efficient homes to be built across England.

The first phase of the alliance launched in 2021 and funded over 550 sustainable homes across the country.

Phase one saw 20 loans completed totalling £150m with an average loan size to SME developers of £7.5m.

Phase two of the Greener Homes Alliance will introduce ten new criteria, four of which must be met for developers to benefit from a 1.25% discount on their interest rate. If six or more criteria are met, developers will be eligible for a 2% discount.

The new criteria will include the use of modern methods of construction (MMC) in the fabric of buildings and a real living wage paid to workers on site. It will also encourage borrowers to support the Lighthouse Charity.

To qualify for funding from the alliance in the first place, all schemes must deliver specific key performance indicators as a minimum. Developers must ensure that all homes built are fossil fuel free and have an average SAP score of 85 or above.

Marcus Ralling, Chief Investment Officer at Homes England said: “This extended Alliance is an excellent example of how we are working with partners like Octopus Real Estate to support the SME housebuilders that are crucial to building a diverse and resilient housing sector.”

Andy Scott, Co-Head of Debt, Octopus Real Estate, added: “We are extremely proud of the impact our Greener Homes Alliance initiative has had when it comes to supporting developers looking to make greener decisions for their projects, and we’ve spent a lot of time working out the new criteria with Homes England to make sure the next phase is as impactful as possible.”