Smaller builders are optimistic Homes England’s new national housing bank will give them a bigger slice of the development action.
The new bank will issue government guarantees directly for loans to develop land which should help smaller builders with upfront infrastructure costs.
National Federation of Builders, NFB, policy and market insight head Rico Wojtulewicz said: “For example, water companies often levy charges to fund upgrades to their network and treatment facilities for new housing.”
The loan guarantees could help withex-industrial sites where gaining planning approval can be complex and result in delays forcing the developer to refinancecontinually.
The new bank will have £22bn lending capacity which the government hopes could leverage £53bn in additional private investmentto deliver 500,000 new homes. The announcement of the new bank coincided with £5bnin infrastructure investment for essential utilities and community services, such as schools.
Chancellor Rachel Reeves said: “It will 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.”
Developer Pocket Living said the new bank coupled with £39bn pledged for affordable housingover the next decade would be a huge boost to delivery.
Pocket Living chief executive Paul Rickard said: “We welcome the recognition of the importance of SME developers with one of the bank’s focuses being new funding options for SMEs and the freedom for the public and private sector to innovate together to deliver more homes.”
Brokers Hank Zarihs Associates said development finance lenders would be keen to work with the public sector over innovative finance options for housebuilders across all project stages. This could include flexible finance forpurchasing land, covering construction costs, or bridging sales delays.
Regeneration and housing to take centre stage
Homes England chair Pat Ritchie said: “The national housing bank 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 is to work with London’s mayor Sadiq Khan to establish a city hall developer investment fund. This would support housing regeneration around London in areas such as Euston, to help build 80,000 homes per year. In greater Manchester, the housing investment loan fund is to be extended to deliver thousands of new homes over the next decade.
The Royal Institution of Chartered Surveyors, RICS, chief executive Justin Youngdescribed the national housing bank as a ‘promising innovation’ to propel investment in housebuilding.
“The industry, and especially SMEs, need all the support they can get for the country to build. Confidence is key if the government is to meet its 1.5 million home target and new streams of investment and support should invigorate new and existing projects.”
Deputy prime minister and housing secretary Angela Rayner said the government’s foot was“firmly on the accelerator” when it came to delivering safe and secure homes.
Later this week chancellor Rachel Reeves is due to unveil a£275bn ten-year infrastructure plan which will include a record £7.9bn flood defence programme.
LinkedIn Question: Will government-backed low-interest rate loans tempt more smaller builders into housebuilding?
