National Housing Bank to support housing delivery in England

The government has confirmed it will establish a new National Housing Bank (the Bank) to provide a range of debt, equity and guarantees to facilitate direct and indirect financing for housing development.

The new Bank will sit within Homes England and have £16 billion to deploy – including £10bn of new money. The government said it expects the Bank’s work to help deliver over 500,000 new homes.

“The trailblazing approach will see Homes England, the national housing and regeneration agency, able to issue government guarantees directly and have greater autonomy and flexibility to make the long-term investments that are needed to reform the housing market and deliver strong returns,” the government said in a statement.

The government has set a target of building 1.5 million new homes by the end of the decade. Its housing strategy is built on three pillars: investment in social and affordable housing; a long term rent settlement to provide financial stability for housing providers; and a £10 billion investment vehicle to unlock private capital through Homes England. The announcement of the new Bank follows on from spending review commitments relating to housing, made by UK chancellor Rachel Reeves last week, and sits alongside the government’s new 10-year infrastructure strategy (106-page / 3.9MB PDF) published on Thursday.

Real estate finance expert Mona Niayesh of Pinsent Masons said: “The announcement of the new National Housing Bank is hugely exciting for the regeneration and housing sector. Supporting delivery via government backed guarantees, equity and innovative lending products is a much-needed step to increase the availability of finance for housing and regeneration projects, including larger projects which struggle to achieve up front investment given their risk and complexity, as well as supporting delivery by developers and housebuilders – including SMEs.”

“This is another piece of the puzzle which, alongside planning reform, skills investment and other announced initiatives, is a key step towards the delivery of the government’s ambitious targets put in place last year,” she said.

Tom Johnson, also of Pinsent Masons, who advises on major real estate projects, said: “The announcement also complements the approach taken by the National Wealth Fund, which is providing loans and guarantees for large scale housing retrofit programmes. The pressing need to upgrade energy inefficient housing is a sometimes overlooked aspect of the UK housing crisis, alongside the delivery of new stock.”

The government said the Bank will “provide a wider range of debt, equity and guarantee products that support SMEs to accelerate their housebuilding and grow their businesses more rapidly” and “expand the use of lending alliances with the private sector, which significantly increases access to finance for housebuilders”.

The Bank will also provide infrastructure finance and guarantees to “support the unlocking of large and complex sites”, as well as “significant scale up” investment into existing partnerships that encourage institutional investors to invest in housing and mixed-use schemes, the government added. A further strand of its work will include supporting mayoral authorities in England to “develop integrated packages of financial support to deliver their housing and regeneration priorities, alongside wider land and grant funding”, while the Bank will also provide low-interest loans of its own to support the delivery of social and affordable housing.

“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,” the government said. “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.”