The government has revealed details of a new National Housing Bank, a permanent institution that will ‘give the housing sector the certainty, flexibility and the capacity’ to deliver 500,000 new homes.
Publicly owned and designated as a Public Financial Institution, the bank will be a subsidiary of Homes England and will offer a range of debt, equity and guarantee products that support SMEs to accelerate housebuilding.The £16 billion allocated to the bank is in addition to the Ministry of Housing, Communities and Local Government’s existing financial guarantee programme.
Lending alliances with the private sector will be expanded to ‘significantly increase’ access to finance for house builders, and the use of large and complex sites will be supported with the provision of infrastructure finance and guarantees.
Investment into partnerships that draw more institutional investment into housing and mixed-use schemes will be ‘significantly scaled up’, with mayors and local leaders supported to develop integrated packages of financial support to deliver housing and regeneration priorities, alongside wider land and grant funding.
The bank will also provide some of the £2.5 billion in low-interest loans announced at the Spending Review to support the delivery of more social and affordable homes.
MHCLG and Homes England will work with the Greater London Authority and established Mayoral Strategic Authorities to agree how to support delivery on regional housing priorities. ‘As part of this, MHCLG and Homes England may agree that some of this £16 billion allocation for the National Housing Bank will be devolved to the GLA or Mayoral Strategic Authorities and would therefore be delivered outside the remit of the bank, but with the same targets and objectives,’ the government said.
MHCLG will also provide around £5 billion to invest across the country, to ‘sit alongside the financial products delivered by the National Housing Bank to ensure large, transformative and otherwise unviable projects nationwide can be delivered’.
Deputy prime minister and housing secretary Angela Rayner commented:
“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.”
Chancellor Rachel Reeves added:
“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.”
Pat Ritchie, chair of Homes England, 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.”
Industry reaction to the news was overwhelmingly positive. A spokesperson for the Royal Institution of Chartered Surveyors said the bank is ‘an exciting innovation’ which could ‘propel much-needed investment into housebuilding’, adding:
“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.
“Crucially, this announcement includes a £5 billion grant for infrastructure and land. This investment should help ensure that we not only build new homes but also essential utilities and social services, such as schools; making them places people want to live in that do not strain existing infrastructure.
“This is another piece of the puzzle, alongside planning reform and skills investment which should work lockstep to deliver on the ambitious targets the Government put in place last year.”
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.”
New Homes Quality Board CEO Emma Toms also welcomed the move, but cautioned against favouring quantity over quality. She commented:
“The launch of the new National Housing Bank is a major milestone in delivering the government’s ambition to build 1.5 million homes. But speed must not come at the expense of quality. When completions surged between 2013 and 2017, customer satisfaction with build quality fell from 91% to 84% and with developer service, from 81% to just 73%. To meet its targets and protect consumers, the government must ensure quality keeps pace with quantity. That’s why its pledge to introduce a mandatory New Homes Ombudsman and quality code is not just welcome, it’s essential.”
And Propertymark CEO Nathan Emerson called for a review of stamp duty thresholds:
“On the face of things, the news of the introduction of the National Housing Bank is much welcome and will inject a desperately needed boost into both the general housing stock and incentivise investment within the private rented sector. We look forward, however, to receiving the finer details of how and who can access this funding.
“For years now, undersupply has caused affordability issues across both the sales and rental market especially within the private rented sector, which has been crippled with rapidly growing demand and a slowing in investment. Therefore, we hope that this injection unlocks enough support for homebuilders and private investors to meet demand well into the future.
“We would urge the UK Government to ensure its finger remains on the pulse, that support is given to all tenures and that it looks to fully bridge the shortfall in order to tackle this issue with longevity in mind. As well as this, a review of Stamp Duty thresholds and taxes imposed on landlords is also needed to address some of the barriers affecting affordability and investment.”
