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G15 landlord secures its largest sustainability-linked loan to date at £525m
L&Q has secured a £525m sustainability-linked funding package to help deliver its target of building 8,000 homes by 2024.
The funding secured from Lloyds Bank will also be used to help the 118,000-home landlord transition towards net zero by 2050.
The deal will convert L&Q’s existing funding with Lloyds Bank to the new loan, which is the biggest sustainability-linked loan in the sector to date.
It has been agreed with margin discounts based on L&Q achieving two key performance indicators (KPIs).
The first involves achieving an average energy performance certificate (EPC) rating of C on all homes by April 2024, reducing carbon and lowering fuel costs for residents.
The second KPI requires that half of the 8,000 homes L&Q plans to build by 2024 will be affordable. It will also act as interim progressive targets to achieving its longer-term aims of bringing forward 30,000 properties by 2030.
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The landlord said the funding will complement its five-year plan to develop a design standard that meets the government’s Future Homes Standard.
Martin Watts, director of treasury at L&Q, said: “This funding will help us on our net zero journey, allow us to achieve the objectives of our corporate strategy and have a positive impact on our residents.
“Only by working closely with finance providers will we create a more sustainable sector, and we are committed to doing that alongside Lloyds Bank.”
Chris Yau, director of sustainability and origination at Lloyds Bank, said tackling climate change is a big challenge that housing associations must face as they modernise their portfolios.
He added: “Sustainability-linked loans support housing associations like L&Q to achieve their ambitions, providing the funding they need and rewarding them for meeting targets that benefit their customers and the environment.
L&Q recently revealed that it had more than doubled its spending on major repairs work as part of a focus on resident safety, amid heightened scrutiny of sector standards.
It spent £71m on major repairs in the year to the end of March 2022, compared with £34m the prior year, as part of the “largest major works investment programme” in its history.
In its current year, L&Q said it is forecasting a 30% increase in maintenance spend.
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