The government has launched a new housing bank in a bid to unlock billions in private sector investment and “turbocharge” UK housebuilding.
The National Housing Bank, a subsidiary of Homes England, will be publicly owned and backed with £16bn of financial capacity, in addition to £6bn of existing finance that will be allocated this Parliament.
With its launch, the government hopes to accelerate housebuilding and leverage £53bn of additional private investment.
The new bank will enable Homes England to issue government guarantees directly and give it greater autonomy and flexibility to make long-term investments. It will also be used to deploy some of the £2.5bn in low-interest loans announced at the recent Spending Review to support build social and affordable homes.
Angela Rayner, deputy prime minister and housing secretary, said: “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.”
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.”
Senior built environment industry figures widely welcomed the government’s announcement.
Paul Rickard, chief executive officer of Pocket Living, said: “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, CEO, partnerships and regeneration, at Vistry Group, added: “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 of Muse Places, said: “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 of Lloyds Banking Group, added: “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, CEO of Places for People, said: “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, added: “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.”
Melanie Leech, chief executive of the British Property Federation, said: “Despite the government’s laudable housing ambitions development viability remains hugely challenging across the country. Anything that helps de-risk the process is welcome, and long-term finance has to be a part of that. Homes England should now work with private sector partners to develop the lending policy so that it pump primes private investment, in turn unlocking more affordable homes. More financial headroom is great as long as the lending terms work with the grain of the sector.”
A spokesperson for RICS, added: “The launch of a National Housing Bank is an exciting innovation which could propel much-needed investment into 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.
“Crucially, this announcement includes a £5bn 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.”
Jason Hardman, head of living sector, UK, at CBRE, said: “We support the establishment of the National Housing Bank, recognising its potential to significantly accelerate the delivery of high-quality housing, of all tenures, across the country. The bank’s support for complex housing developments, which often face significant upfront costs, will be crucial in unlocking the construction of sustainable new homes in areas with the greatest need. We are especially encouraged by the planned support for small and medium-sized enterprises.
“We are eager to collaborate with partners, clients, and stakeholders to attract private capital into the sector, which the National Housing Bank can effectively leverage. By working together, we are confident in our collective ability to contribute meaningfully to the goal of building 1.5 million new homes.”
Priya Nair, chief executive of The National Housing Finance Corporation, added: “We look forward to using our extensive experience to help the government as they look to unlock £53bn of private investment to create 500,000 homes. As our recent transaction shows, there is appetite for institutional investors to engage with the sector”
Adrian Plant, director of SOWN, (part of LRG), said: “It is encouraging to see a further initiative to boost housing. But as we have done throughout this Parliament, we call on the government not to ignore shared ownership as a vital element of the housing mix. We have seen successive pledges to boost affordable homes, but to date the government has ignored shared ownership despite it being a vital route to home ownership.
DJ Dhananjai, CIO at Edmond de Rothschild REIM (UK), added: “The latest government announcement is another clear message that generates confidence for global private capital to be invested in the UK housing market. This is making the market one of the more attractive investment asset classes given many of the downside risks, including viability gaps, are likely to be addressed by the proposed financing structures.
“The current approach lays the foundation for mutigenerational public-private capital partnerships for the delivery of housing, which needs both additionality and replacement of poor quality housing stock – especially when compared to other European markets. Setting up a clear delivery and partnership structure across a wide range of private capital sources will be key to implementation and the success of the housebuilding sector.”
