Small and medium sized property developers are to receive £1 billion of loan finance as part of an initiative by Barclays and the government to tackle the UK’s housing shortage.
The funding is being provided through a partnership between the government and Barclays Bank and it aims to speed up the delivery of thousands of new homes planned across England.
Loans of between £5 million and £100 million will be made available to developers who demonstrate “the necessary experience and commitment to building excellent new homes, whilst boasting a track record of delivering challenging projects on time and to target,” the government said.
The Housing Delivery Fund, overseen by the government’s Homes England delivery agency, will put greater emphasis on opening up the housing market, which sees almost two-thirds of new homes built by just 10 companies at present.
It will support the delivery of new homes, including social housing, retirement living and apartments for rent, whilst also encouraging greater innovation on how housing is delivered such as brownfield land and urban regeneration projects.
Housing Secretary James Brokenshire said: “This is a fantastic opportunity to not only get more homes built but also promote new and innovative approaches to construction and design that exist across the housing market.”
John McFarlane, chairman of Barclays, claimed the fund would show developers that the right finance is available for projects that help meet the urgent need for more homes.
The agreement forms part of the government’s wider ambition to increase the pace of housing delivery in England. Ministers want to achieve 300,000 new homes a year by the mid-2020s, which follows the 217,000 homes built last year, the biggest increase in housing supply in England for almost a decade.
In order to qualify for funding, developers need to prove the scheme would not progress or would not progress as quickly without funding, or that the scheme aids innovation. A minimum of 10 homes must be built as part of the development, and they must be in England.
“This innovative £1 billion partnership will provide a significant boost to a diverse range of residential property developers and drive a dynamic and competitive marketplace,” said Nick Walkley, chief executive of Homes England.
According to Select Property Group, in the private rented sector traditional buy-to-let homes can no longer meet the needs of the UK’s rising number of younger tenants, who demand experience living in prime city centre locations.
It comes after the government launched a £1.3 billion Land Assembly Fund, which will be used to acquire land needing work and get it ready for the market, making it less risky for developers to invest in and start building.
Homes England recently acquired land in Burgess Hill in Sussex, where it is also delivering the infrastructure so that the roads, schools and doctors surgeries are all in place for over 3,000 new homes that will now be built there.
Homes England chairman Sir Edward Lister said: “Homes England is stepping in where the market isn’t working, unlocking land and releasing sites to those developers that are committed to providing homes at pace.”
DMZ thinks initiatives that try to speed up property development are a good thing, but time will tell whether the government’s latest efforts have the desired effect.