The Scottish National Investment Bank said it has invested £50 million into London-based Octopus Capital’s Affordable Housing Fund — part of a £100 million fundraise by Octopus that will help deliver affordable and energy-efficient homes.

Scotland’s development bank said its capital will be deployed in Scotland, marking the introduction of a new “intermediate rent” tenure north of the border, where both rent and energy costs will be discounted by around 20% compared to market renting.

The £50 million is one of the biggest single investments made by the Scottish National Investment Bank.

“As an impact investor, aiming to secure both commercial returns and societal benefit, the Bank’s funding is aligned to its mission to invest in places transforming communities and supporting people to thrive …” said Octopus Capital.

“In a first for the Fund and Scotland, the investment will introduce an intermediate rent tenure where both rent and energy costs will be discounted by around 20% compared to market renting.

“The Bank’s capital will all be deployed in Scotland and will enable a minimum of £100m to be invested in Scottish developments. The homes will also be offered to key workers on a first priority basis.

“The remaining capital comes from a US public foundation, reflecting the Fund’s expanding global investor base and growing appeal to mission-aligned institutions.

“The funding will also unlock more than 1,000 Zero Bills homes across England and Scotland, offering affordable and intermediate rental properties where residents won’t have to pay a penny for their home energy bill.

“Launched in 2022, Octopus Energy’s Zero Bills is a world-first tariff lets customers move into homes packed with cutting-edge green tech – including a heat pump, a battery and solar panels  – with no home energy bills for at least 5-10 years.”

Nicola Douglas, Executive Director – Sustainable Investments, Scottish National Investment Bank, said: “The Affordable Housing Fund is a brilliant example of the innovative approaches – to both securing capital and ensuring homes are affordable – that we need to deploy at scale.

“Octopus Capital’s approach to sustainable building and discounting both rent and energy takes a holistic approach to addressing cost-of-living pressures.

“We were also attracted to the Fund’s approach to regenerating sites, utilising local supply chains, and supporting social inclusion.”

Jack Burnham, Head of Affordable Housing, Octopus Capital, said: “Our aim for this year was to double the size of our Affordable Housing Fund, and we’re so pleased to welcome our new investors into the Fund, enabling us to close in on our next £500m milestone.

“This new capital also presents a few exciting firsts; the investors are from new types of institutions to those in the Fund already, building our growing group of those looking for resilient income and long-term social impact.

“This also marks our first time investing specifically into Scotland and its discounted market rent housing. We’re hoping to transform communities there, providing energy-efficient, future-proofed housing to those that need it most.”