Tandem Bank has announced that is one of the first lenders to be approved in the government’s Warm Homes Loan Scheme, offering reduced rate loans to help homeowners fund energy efficiency installations such as solar panels and air source heat pumps.
The scheme is designed to support participating lenders in offering lower-cost finance for eligible home improvements, including heat pumps, solar panels and battery storage.
Research commissioned by the Department for Energy Security and Net Zero found 68% of homeowners see high upfront cost as a major barrier to green home improvements, while few are very aware of the finance products available to fund them.
The Warm Homes Loan Scheme provides government grant funding to participating lenders, helping to reduce the cost of borrowing for home upgrades such as heat pumps and solar panels.
Lenders pass this saving on to customers through lower interest rates, making it more affordable for homeowners to install technologies that can help lower their energy bills.
The scheme, which forms part of the government’s Warm Homes Plan and supports the UK’s Net Zero ambitions, is open to homeowners and private landlords for residential properties.
Unlike some government support schemes, applicants do not need to earn below a specific amount or receive certain benefits.
However, lenders will still assess income, existing financial commitments and creditworthiness before approving an application.
Darvish Heshejin, managing director of home improvement lending at Tandem, said: “We’re proud to be one of the first lenders participating in the government’s Warm Homes Loan Scheme. We’ve been financing green home upgrades for years, supporting the technologies, installers and industry bodies that make them possible, and to date have funded almost £1bn of energy efficiency improvements.
"We believe the scheme will encourage more households to adopt green home technologies, and we’re excited to work with our installer partners to help more customers heat and power their homes more efficiently.”
Shanika Amarasekara, chief executive of the Finance & Leasing Association, commented: "Finance powers the real economy. It helps people make important investments in their lives, and it has a critical role to play in making the UK's transition to cleaner energy affordable and achievable.
"We welcome the government's recognition that private finance can help deliver its Warm Homes ambitions. But making finance cheaper is only part of the answer. The real test of this scheme will be how easy it is for households to turn the ambition of a warmer, more energy-efficient home into reality.
"The FLA has been closely involved in helping to shape this work through the steering group. Together with Nesta, we have placed particular emphasis on the customer journey, because consumers need a clear, straightforward route from understanding the improvements available to arranging appropriate finance and having the work completed.
"Our members have identified practical issues that will need continued attention, including how finance is integrated with the installation process, how responsibilities are allocated between lenders and installers, and how the scheme can be delivered efficiently without unnecessary complexity. This includes managing the transition for customers who have already arranged finance and are awaiting installation, to avoid unnecessary cancellations or delays.
"A successful scheme must work for the household making the investment and for the lenders and installers expected to deliver it.
"The opportunity here is bigger than an individual loan scheme. If we get the design right, we can help create a sustainable market for financing household energy improvements, mobilising private investment alongside government support and making the transition accessible to more people."
