The government has announced the creation of a new National Housing Bank that it says will unlock billions in private sector investment to accelerate the delivery of new homes.
The new bank will be a subsidiary of Homes England and will be backed with £16billion of financial capacity, on top of £6billion in existing finance that will be allocated this Parliament. It aims to leverage £53billion of additional private investment, and the government says over 500,000 new homes could be delivered through the decision.
As part of the approach, Homes England will be 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, said: “We‘re turning the tide on the housing crisis we inherited – whether that’s fixing our broken planning system, investing £39billion 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 £2.5billion in low-interest loans announced at the Spending Review to build social and affordable homes and follows the £39billion investment announced at the Spending Review for a new 10-year Affordable Homes Programme.
The announcement comes ahead of the government’s 10 Year Infrastructure Strategy to be published tomorrow. The strategy will set out a £725billion 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 £53billion 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 upfront 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, helping to 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 £5billion grant funding for infrastructure and land from the new National Housing Delivery Fund will complement capital investment from the National Housing Bank. The government says the 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.
Kate Henderson, chief executive of the National Housing Federation, said: “The National Housing Bank is another welcome, innovative initiative from the government and a clear statement of intent on fixing the housing crisis. Alongside the ambitious new Affordable Homes Programme and the long-term certainty provided by the new rent settlement announced at the Spending Review, the £2.5billion low-cost loans for social housing providers will bolster our sector’s capacity to get building. We will continue to work with the government to deliver the truly affordable homes so many people across the country need.”
