The National Housing Bank: more details and sector reaction

The housing sector has broadly welcomed the government’s announcement of a new housing bank, with sector leaders hopeful it will boost regional development and funding for SMEs.

The Ministry of Housing, Communities and Local Government (MHCLG) last night confirmed it would set up a “National Housing Bank” as a subsidiary of Homes England.

It will be designated as a public financial institution, meaning it can issue government guarantees directly and have greater autonomy to make long-term investments.

The bank will be backed with £16bn of financial capacity in addition to £6bn in existing guarantees. The government believes it can lever in £53bn in additional private funding to deliver more than 500,000 homes. It will issue loans and guarantees and make equity investments.

The government confirmed an additional £5bn for infrastructure. The bank will also deploy some of the £2.5bn in low-interest loans announced at the spending review to support the building of affordable housing.

Housing association bosses in London are hopeful these will be used as a part of Housing Today and G15’s proposed amortising grant model which aims to alleviate a short term balance sheet squeeze in the capital.

MHCLG is intending for the bank to support SMEs to accelerate housebuilding. It believes it will enable the expansion of lending alliances with the private sector and unlock larger and complex sites.

It is understood some of the £16bn may be devolved to the Greater London Authority and Mayoral Strategic Authorities in other parts of England. Homes England will work with Mayors and local leaders to develop packages of financial support to deliver their housing and regeneration priorities.

Angela Rayner, deputy prime minister and housing secretary, said: ”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.” 

>>See also: The chancellor’s £39bn boost buys time for social housing – now innovative private finance models must help deliver at scale

This morning, sector leaders have been reacting positively to the housing bank launch which follows last week’s spending review in which £39bn was announced for a 10-year Affordable Homes Programme

Megan Hinch, policy manager at Chartered Institute of Housing, said the institute welcomes the bank but added: “It is crucial that this initiative is adequately resourced, with clear and consistent processes, culture and capacity to ensure speedy decision-making for providers hoping to build.”

Patrick Murray, executive director, policy & external relations at the Northern Housing Consortium, said: “We’ve consistently highlighted the importance of local solutions to meet local needs. We’re pleased the announcement includes plans for Homes England to work with Mayors and local leaders to develop integrated funding packages which address local housing and regeneration priorities.”

Brian Berry, chief executive of the Federation of Master Builders said a lack of finance “is often cited as one of the top five issues holding back SME development”.

“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.”

Greg Reed, chief executive at Places for People, said “Combined with an expanded new Affordable Homes Programme, transformative new measures like this will stimulate the required momentum on housebuilding and enable providers like Places for People to play a huge part in helping Government meet its 1.5m new homes target.

“This is another huge brick in the road and we will keep talking to Government, while also exploring complementary solutions to financing our sector’s clear ambition of delivering lasting change for customers and communities.”

Kate Henderson, chief executive of the National Housing Federation, described the bank as a “ welcome, innovative initiative”.

She said: “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.” 

Housing Today and G15’s State of the Capital report

Providing new social tenancies for the 323,800 households on London’s waiting lists would inject at least an additional £7.7bn a year into London and the UK’s economy.

However, while social housing providers and ministers are both aware of the need for more affordable housing, both housing associations and the government have balance sheets constraints.

This inaugural State of the Capital report, produced by Housing Today in partnership with G15, looks at several ideas that could be adopted to help the sector build much-needed affordable housing in London during these difficult times.

The report is written by Carl Brown of Housing Today, in collaboration with the G15.

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