Atom Bank launches loans for land converted into habitat banks
Atom Bank has launched a ‘Natural Capital’ lending proposition to support the development of new housing and infrastructure across the UK.
As part of the Natural Capital loans, the lender has established methods for handling changes in land value and loan-to-value (LTV) ratios as arable land is converted into a habitat bank.
Demand for habitat banks come as developers are usually required to deliver at least a 10% biodiversity net gain as part of planning applications in England.
In a trial of the proposition, Atom Bank secured funding for the creation of three Biodiversity Net Gain (BNG) habitat banks – which are areas of land where habitats are created or enhanced to boost biodiversity.
These habitat banks offer developers a way of meeting biodiversity targets when onsite delivery isn’t possible, as the sites create BNG units that are sold to developers.
Across the three sites funded by Atom Bank, 480 BNG units were created and registered with Natural England – enough to deliver the biodiversity net gain required for around 2,410 new homes.
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The funding for BNG financed the transformation of low ecological value arable land on three sites into diverse habitats.
This included a 21-hectare site in Boxworth, Cambridgeshire, a 40-hectare site in Aldwincle, North Northamptonshire, and a 20-hectare site in Stockbridge, Hampshire.
Many of BNG Partnership’s habitat banks have already been established, immediately improving biodiversity and creating measurable improvement to wildlife on site.
The net gain biodiversity targets mean most new developments have a positive impact on the environment, whether that’s a new road, pipeline, railway line, commercial building, or – as in the three projects that Atom Bank has funded to date – new homes.
BNG requirements apply across development generally, including commercial, industrial and logistics schemes, solar and other renewables, and minerals and waste.
As part of the Natural Capital loans, Atom Bank is offering flexibility in its loan terms to recognise that developers may be reliant on making inconsistent repayments.
Natural capital loans are available for the purchase or refinance of land in England with the intention of creating BNG units, and are available to LLPs or limited companies only.
Loans are available between £100,000 and £2m and up to a maximum of 65% LTV against the original land value.
Edward Twiddy, director of ESG at Atom Bank, said: “Supporting the creation of BNG habitat banks is essential for the future of the housing sector.
“These projects will help unlock new homes as the government seeks to hit its ambitious housing and infrastructure targets.
“Atom Bank is already innovating in this new market, deploying the flexibility and creativity for which we have become known in the commercial mortgage space. Now, we are launching this proposition to a wider market and welcoming more applications.
“As a leading residential mortgage and SME loan provider, the health of the housing market, new commercial development and the provision of infrastructure to support our economy are essential to our own business, and this is a great opportunity to use our expertise and our willingness to move in line with a more sustainable and exciting future.”
Jason C Wright, director at BNG Partnership, added: “Buying land outright to create a habitat bank is the most demanding way to do it, but also the most secure.
“It means committing capital to the freehold years before a single unit is sold, with the benefit that we control delivery for the full 30 years. That certainty and transparency is what developers and planning authorities want to see.
“It was vital to find a financial partner with the foresight and commitment needed to build long-term natural capital.
“Conventional agricultural lending does not cope well with land whose value and use are both changing as habitat is established, and few lenders have been willing to work on that basis.
“Atom’s financial insight and dedication to the environment is what has allowed us to create these three sites, providing a strong foundation in a fast-growing industry.”
