Hundreds of thousands of extra homes will be delivered thanks to a bold new government-backed ‘housing bank’ that will unlock billions in private sector investment to turbocharge housebuilding.
The National Housing Bank, a subsidiary of Homes England, will be publicly owned and backed with £16 billion of financial capacity, on top of £6bn of existing finance to be allocated this Parliament, in order to accelerate housebuilding and leverage in £53 billion of additional private investment, creating jobs and delivering over 500,000 new homes.
The trailblazing approach will see Homes England, the national housing and regeneration agency, able to issue government guarantees directly and have greater autonomy and flexibility to make the long-term investments that are needed to reform the housing market and deliver strong returns.
With long-term, flexible capital, the National Housing Bank will be able to act as a consistent partner to the private sector, bringing the stability and certainty that housing developers and investors need to make delivery happen. It will also support SMEs with new lending products and enable developers to unlock large, complex sites through infrastructure finance.
Deputy Prime Minister and Housing Secretary Angela Rayner: “We‘re turning the tide on the housing crisis we inherited – whether that’s fixing our broken planning system, investing £39 billion to deliver more social and affordable homes, or now creating a National Housing Bank to lever in vital investment.
“This government is delivering reform and investing in Britain’s renewal through our Plan for Change. Our foot is firmly on the accelerator when it comes to making sure a generation is no longer locked out of homeownership – or ensuring children don’t have to grow up in unsuitable temporary accommodation, and instead have the safe and secure home they deserve.”
The Bank will deploy some of the £2.5 billion in low-interest loans announced at the Spending Review to support build social and affordable homes.
It builds on £39 billion investment announced at the Spending Review for a new 10-year Affordable Homes Programme, which is the biggest boost to social and affordable housing investment in a generation, supporting our Plan for Change milestone to build 1.5 million homes.
This comes ahead of the government’s 10 Year Infrastructure Strategy to be published tomorrow. The strategy will set out a £725 billion plan to rebuild the UK over the coming decade, bringing together for the first time economic, social and housing infrastructure.
Chancellor of the Exchequer, Rachel Reeves, said: “Our Spending Review last week delivered the biggest cash injection into social and affordable housing in 50 years as we progress on our promise to build 1.5 million homes.
“As part of our Plan for Change, the new National Housing Bank will unlock £53 billion of additional private investment—giving more working people the security of home ownership and investing in Britain’s renewal.”
Because we reformed our fiscal rules, we can invest through government-backed institutions, like the new National Housing Bank, to attract private investment and make sure money flows into projects that deliver real benefits for working people and communities.
The Bank will help unlock a wide range of sites, including larger ones which struggle to get up front lending given their risk and complexity, using a mixture of equity investment, loans and guarantees to leverage global institutional capital into UK housing, reducing risk at the early stages of development.
It will also support SME lending by establishing additional lending alliances with private sector partners and leverage in additional capital and expertise, including providing revolving credit facilities to help SMEs to grow and build out their housing pipeline more quickly. This follows proposals previously announced to bolster the capabilities of SME developers, which provide local jobs and train construction apprentices, by streamlining and simplifying overly complex planning rules.
Homes England Chair Pat Ritchie said: “Establishing the National Housing Bank, as a part of Homes England, builds on the Agency’s expertise at providing a wide range of finance to partners and places to unlock the delivery of new housing and mixed-use schemes.
“The National Housing Bank also responds to calls from the housing sector, mayors and local leaders to increase the scale of available public and private finance for housing and regeneration, provide a broader range of flexible debt, equity and guarantee products, and enable more timely decision making.”
The government will also work with the Mayor of London to establish a City Hall Developer Investment Fund, and support housing regeneration around London Euston, to help deliver London’s ambition to build around 80,000 homes per year. In Greater Manchester, the Housing Investment Loan Fund will be extended to deliver thousands of new homes over the next ten years.
A programme of investment including £5 billion grant funding for infrastructure and land from the new National Housing Delivery Fund will complement capital investment from the National Housing Bank. This package will drive growth and transform places, boosting housing supply on otherwise unviable large and complex sites, and support land assembly, remediation and up-front infrastructure delivery such as utilities and schools.
Brian Berry, Chief Executive of the FMB said: "We know from our own data that a lack of finance is often cited as one of the top five issues holding back SME development, and that banks have historically been risk averse when it comes to lending to house builders.
"A new clear pathway like the National Housing Bank will give developers confidence to borrow. This is a bold change and sorely needed if the Government is to deliver its 1.5 million housing target. While details are still to be tied down it will be important that the new bank is able provide suitable finance options for smaller and micro house builders to help local economies thrive."
