The National Wealth Fund (NWF) has announced a £400m financial guarantee backed by NatWest Group to unlock £500m of investment in retrofit projects for social housing providers.

The guarantee will cover a series of NatWest loans to registered social housing providers, to help reduce energy consumption and accelerate the decarbonisation of their housing stock.

NWF said it will guarantee 80% of each retrofit loan originated by NatWest Group up to £500m, for a total commitment of up to £400m.

The cash will cover retrofitting measures including the installation of energy-efficient heating, lighting and insulation, ventilation and heating controls, as well as renewable energy generation equipment, plus work on resilience measures and to improve biodiversity.

NWF said 28% of social homes in England and Wales have an EPC rating of ‘D’ or worse, while 10% do not meet the Decent Homes Standard.

NWF chief executive John Flint said: “Everyone should be able to live in a warm home with affordable energy bills. However, the scale of the retrofit challenge facing the social housing sector is clear and significant investment is needed now to ensure that residents across the UK have homes fit for the future.

“The NWF has an important role to play in mobilising the private finance that will underpin this transformation. Our support for NatWest builds on our work with other lenders, leveraging their reach and expertise to ensure that as many registered providers as possible have access to attractive financing.”

The announcement brings NWF’s total support for retrofitting social housing to £1.3bn, following guarantees of £350m for lending to the sector by Barclays UK Corporate Bank, £400m for Lloyds Banking Group and £150m for THFC.

NatWest Group chief executive Paul Thwaite said: “NatWest continues to be a leading lender to the UK social housing sector, and last month we upgraded our lending ambition to £7.5bn as demand continues to grow.

“Working with the NWF on deploying £500m of new loans means we can help retrofit more social homes across the UK at pace – supporting those who need it most.”