Property Linked Finance (PLF)

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An estimated investment of £360 billion is needed to decarbonise the UK’s commercial and residential buildings by 2050 – an investment that cannot be met by the public purse alone. Property Linked Finance (PLF) – an innovative financial solution for both residential and commercial properties that is not currently available in the UK – offers a vital new mechanism to crowd in private capital and to help achieve the necessary investment into installation of low carbon technologies, energy efficiency and climate resiliency projects in the UK, with the potential to scale globally. 

Research from the GFI estimates that PLF has the potential to catalyse between £52 billion and £70 billion of private investment into decarbonisation of the residential market across England, Scotland and Wales – materially contributing towards the UK’s net-zero ambitions and helping improve the UK’s inefficient building stock which is responsible for 23% of the UK’s total greenhouse gas emissions.

PLF enables access to affordable and long-term funding for environmental improvements for buildings by linking the finance to the property, rather than the owner. This means the payment obligation can transfer to the new owner when it is sold. Property owners would only pay for energy efficiency measures up until they sell their property, or the measures have been paid off, while new buyers benefit from a more energy efficient, potentially more appealing property, in return for continuing to make regular payments towards the upgrades. The mechanism would work both for homeowners as well as owners of commercial properties.  

The GFI is creating a roadmap for the enabling conditions needed to drive the success of a PLF initiative which could accelerate the decarbonisation of buildings at pace. This will involve working with pioneering market participants to develop a PLF commercial property pilot in the UK.

Reports

Property Linked Finance: A new financial solution to decarbonise the UK’s homes and buildings

Property Linked Finance: Rising consumer demand for energy and the need for financial innovation

A Greenprint for Property Linked Finance in the UK

Award-winning innovation

The GFI was recognised as a PACESetter at the PACENation Awards 2023 for Advocacy and Policy Innovation, for our leading work on PLF.

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News & Insights

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News

Property Linked Finance has the potential to unlock up to £70 billion of investment for UK home energy efficiency improvements

Property Linked Finance has the potential to unlock up to £70 billion of investment for UK home energy efficiency improvements

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Assessing the Materiality of Nature-Related Financial Risks for the UK

Assessing the Materiality of Nature-Related Financial Risks for the UK

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News

Green Finance Institute publishes its “Local Climate Bonds Toolkit” to help unlock a potential £3bn opportunity for local green investment

Green Finance Institute publishes its “Local Climate Bonds Toolkit” to help unlock a potential £3bn opportunity for local green investment

Testimonials

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“We cannot stay in line with the 2015 Paris Agreement if we do not reduce emissions in the built environment. Property owners need innovative new products to help incentivise transition of their real estate assets. Laudes Foundation works with the Green Finance Institute because they are specialists at developing innovative new concepts to shift markets, such as Property Linked Finance in the UK, which can drive decarbonisation at scale.”

Amol Mehra

Director of Industry Programmes, Laudes Foundation

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"We see strong growth potential for PACE, both domestically and internationally, which is why we’re working with the Green Finance Institute to share best practice and key learnings."

Jason Darby

CFO, Amalgamated Bank

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“It’s therefore hugely encouraging to see the Green Finance Institute’s latest report underlining the transformational impact that Property Linked Finance could have. This innovative solution could unlock huge amounts of investment and provide people with attractive financial offers by linking funds to the property rather than the property owner. Developing long-term, green finance products such as this will be crucial in making retrofit affordable to many more households.” “Better insulated homes will in turn reduce the UK’s overall demand for energy, which will improve energy security, bring down energy bills and accelerate the transition to net zero”.

Stew Horne

Head of Policy, Energy Saving Trust

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“We are delighted to see the Green Finance Institute’s increased focus on product innovation. As institutional investors, with people-centred values and a long-term perspective, we realise both the global scale of the challenge and the tangible, real-life solutions necessary to help property owners upgrade their homes to future-fit buildings that are sustainable, resilient and comfortable. Property Linked Finance has the potential to be one of these solutions, with huge potential and replicable scale, and the expanding role of PACE structures could support its growth.”

Pete Gladwell

Group Social Impact & Investment Director, Legal & General

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“A key part of the energy transition is energy efficiency, improving existing buildings (particularly residential homes) to use energy in a more considered way. This is even more pressing now given the rise in energy prices. However, a common barrier to implementing these improvements is the upfront cost of installation. We are delighted to be working with the GFI on their PLF project, as they take steps to put in place a financing solution that makes energy efficiency measures available to all homeowners, with a view to both reducing energy consumption and decarbonising our homes.”

Caroline Saul

Partner, Osborne Clarke