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New financing could boost UK real estate sustainability

27th November 2023

Property-linked finance could enable billions of pounds worth of investment into improving the energy efficiency of the UK’s homes and commercial buildings, a new report claims.

The Green Finance Institute report argues that property-linked finance, where loans are linked to the asset rather than the owner, could contribute to the estimated £360 billion ($455 billion) of investment required to upgrade the UK’s inefficient buildings by 2050.

An asset owner using property-linked finance would be able to fully fund energy efficiency upgrades and then transfer payment obligation to a new owner if the property is sold.

The Green Finance Institute said the US Property Assessed Clean Energy (PACE) model of property-linked finance has enabled the investment of over $13 billion in making homes and commercial buildings greener and more resilient.

Emma Harvey-Smith, programme director, Green Finance Institute, said: “Introducing property-linked finance to the UK market could channel billions into improving the energy efficiency of the UK’s homes and buildings. The GFI first identified PLF as a solution in 2020 and looks forward to working with the finance and retrofit sectors to bring forward a scalable and customer-centric model for PLF that will support the UK’s net-zero ambitions.”

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