Govt launches housing bank to deliver 500,000 homes

The Homes England subsidiary will have a £16bn war chest to accelerate residential delivery across the country with low interest loans, equity investments, and guarantees.

The government launched the National Housing Bank today, just shy of a week since the spending review, during which chancellor Rachel Reeves reiterated Labour’s commitment to housebuilding.

Described by the government as a “trailblazing approach”, the housing bank will give Homes England the ability to “issue government guarantees directly” and have “greater autonomy and flexibility to make the long-term investments”.

It is hoped that investments made by the bank will de-risk sites and leverage £53bn of additional private capital and deliver more than 500,000 homes.

A statement from the Ministry of Homes, Communities, and Local Government said: “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.”

In total, the bank will benefit from £16bn of new government funding on top of £6bn already committed during this parliament.

Deputy prime minister and housing secretary Angela Rayner said the initiative was the latest in a line of Labour interventions to address the housing crisis.

“We‘re turning the tide on the housing crisis we inherited – whether that’s fixing our broken planning system, investing £39bn 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 help unlock small and large sites and support developers of all size, the government said. SMEs will benefit from “lending alliances with private sector partners” and revolving credit facilities.

In addition, £5bn of grants have been set aside to fund infrastructure improvements to “complement capital investment from the National Housing Bank”, the government said.

Ahead of the spending review, Homes England bosses had called for more flexibility in how the agency can invest. The bank is a response to that plea.

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.”

As part of the announcement, the government confirmed the Greater Manchester Housing Investment Loans Fund would be extended for another 10 years.

The fund has proven controversial due to the amount leant to Renaker, Manchester’s most active developer. Overall, Renaker has been awarded loans of £578.32m by the GMCA, more than half of the total outlay.

Industry reaction

Paul Rickard, chief executive, Pocket Living 

“The creation of this National Housing Bank, alongside the recent spending review and other policy announcements, is a huge boost for housing delivery. We particularly welcome the recognition of the importance of SME developers with one of the banks focus’ being new funding options for SMEs and the freedom for the public and private sector to innovate together to deliver more homes. We have been working closely with government to ensure that the SME sector has capacity, certainty, and flexibility and we are delighted this is now being delivered.”

Stephen Teagle, chief executive, partnerships and regeneration, Vistry Group 

“This announcement underlines the government’s commitment to use all the tools available to drive delivery and tackle the housing crisis head-on.

“Establishing the new National Housing Bank as a subsidiary of Homes England will help bring schemes forward at pace, ensure alignment with other programmes and gain traction with developers and investors keen to leverage investment and drive delivery. It recognises that long-term place making and long-term investment go hand in hand. Paired with last week’s measures this is further evidence of a government with an innovative and clear-sighted focus on addressing the years of under supply of new homes to build vibrant communities for the future.

“Through Vistry’s unique partnerships model, we look forward to continue working with Homes England and all our partners to maximise the benefits of this new initiative.”

Phil Mayall, managing director, Muse Places 

“Today’s announcement is hugely exciting for the regeneration and housing sector.  Muse has long advocated the need for a longer-term, partnership approach to the delivery of housing in areas of most need and the new National Housing Bank achieves this at scale.  We very much look forward to working in partnership with the Bank and the Government to deliver at pace.”

Charlie Nunn, group chief executive, Lloyds Banking Group 

“A new National Housing Bank as part of Homes England is a powerful commitment towards building essential housing across the UK, at pace and at scale. As the MADE partnership between Lloyds Banking Group and Homes England demonstrates, by providing greater certainty and risk-sharing for developers, SME housebuilders, regional and local authorities, while strengthening public-private partnerships for institutional investors, we can accelerate the flow of private finance and deliver more homes in the places they’re needed most.”

Greg Reed, chief executive, Places for People 

“The catalytic combination of a generationally significant affordable programme and the creation of a National Housing Bank is truly game changing for the provision of social housing in this country.”

Kate Henderson, chief executive of the National Housing Federation 

“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 £2.5bn 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.”