Paragon Bank’s development finance division has expanded its Green Homes Initiative by an extra £100 million to support developers building energy-efficient homes.

Paragon’s Green Homes Initiatives was launched in November 2021 with an initial £100 million tranche of lending available to developers.

Following the scheme’s success, it was increased to £200 million in 2023 and has been extended to £300 million to support more SME developers to deliver green homes.

The Green Homes Initiative allows developers that deliver homes with an Energy Performance Certificate (EPC) rating of A to receive a 50% reduction on loan exit fees. To qualify, at least five private units must be built within the development and 80% or more of these must have an EPC rating of A, with any remaining being at least EPC C standard.

Government data revealed that 10,722 new-build domestic properties achieved an EPC rating of A in England and Wales last year, a 41% increase on 2022, but still only representing 5% of all new homes built during the year.

Neal Moy, managing director of Paragon Development Finance, said: “We are thrilled to increase our Green Home Initiative fund to £300 million, enabling Paragon to support more developers creating environmentally-friendly homes. This is of vital importance as we head towards 2050 and a carbon neutral future.

“We have been pleased with the strong level of demand for our Green Homes Initiative, which shows that producing energy-efficient homes is high on the agenda of many SME housebuilders and developers. We’re passionate about meeting the market’s demands and we look forward to funding more green housing schemes in the future.”

Deborah Bateman, sustainability director at Paragon Banking Group, added: “It’s vital that we support customers across our business lines on the journey to Net Zero and we have been pleased with the adoption of the Green Homes Initiative since its launch in 2021.

“This scheme rewards those developers building the most energy-efficient homes, helping to improve the environment and reduce energy bills for residents. The UK still has a long way to go to become carbon neutral by 2050, but we stand ready to support our customers.”