£400m house fund made up of loans not grants, housebuilders warn

The Get Britain Building investment fund was launched to support firms in need of development finance. The Government said it was to "unlock progress on stalled sites which have planning permission and are otherwise ready to go".

House building trade body the Home Builders Federation (HBF) has warned that the scheme will see little or no public money given to developers. Instead, the fund will come in the form of development loans at commercial rates or equity stakes in projects, according to an Inside Housing report.

Details of the fund were not included in the housing strategy and the HBF has warned that the scheme would include "little, if any, grants or gap funding", in a briefing note to its members.

The briefing note said that any loans would likely be offered at "commercial rates" to developers that have had difficulty accessing financing from traditional lenders. It is expected that the majority of the government’s investment will come in this form, with small and medium-sized businesses taking the bulk. The initiative has faced opposition, with critics arguing that parallel investment should be directed at large developers and housebuilders.

The Government has said that it will publish a prospectus providing more details and inviting bids before the end of the year. The fund will be launched and managed by the Department for Communities and Local Government (DCLG) and the Homes and Communities Agency.

"The £400 million announced to re-energise stalled housing projects under the Get Britain Building scheme will be a mixture of grant and loan financing," said a DCLG spokesman, according to the Inside Housing report.