Under the scheme, developers delivering homes with an A EPC rating will 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 A EPC rating, with any remaining being at least EPC C standard.

The initiative is designed to support the UK Government’s target of net zero carbon emissions by 2050.

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Robert Orr, managing director at Paragon Development Finance (pictured above), said: “The direction of travel is clear — we need to start building more homes in the UK that will help deliver the Government target of net zero by 2050. 

“Many housebuilders are already adopting measures to improve the energy efficiency of their homes and there are early signs consumer sentiment is shifting towards a preference for more sustainable homes; however, we need to do more.”

“As a key lender in this sector, we also have to play our part and that is why we have launched the green homes initiative. 

“This delivers a tangible financial benefit to SMEs focusing on building the most energy efficient homes and we hope that it encourages more developers to drive improvements in this area.”

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 are looking at ways we can help them to improve both their own operations and also the product they produce. 

“We want to ensure there is a tangible benefit to them for doing so and we believe this initiative will be popular with SME housebuilders as they develop the green homes of the future.”