Govt injects £3bn into credit guarantee programmes to boost housebuilding
More than 20,000 new homes could be built off the back of the investment, which aims to make it easier for SME developers to access credit.
The government has announced the £3bn of support for SME housebuilders and the build-to-rent sector will be pumped into two existing initiatives: ENABLE Build, and the Private Rented Sector Guarantee Scheme.
ENABLE Build, which is a British Business Bank scheme that gives guarantees to banks who provide development finance to SMEs, will be doubled from £1bn to £2bn.
Meanwhile, the PRS guarantee scheme will reopen at the end of the year with £2bn available in the form of guarantees against bank debt for the development of rented homes.
With fresh cash injections, it is hoped the schemes will give banks the confidence to lend more to housebuilders by reducing the funders’ exposure to the market.
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The 20,000 new homes the government expects the re-upped guarantee schemes to generate amount to less than 1% of the 1.5m target Labour has set itself over the next five years.
Housing and planning minister, Matthew Pennycook said the £3bn would help SME’s play their part in tackling the housing crisis.
“SME housebuilders and build-to-rent operators have a crucial role to play in delivering the government’s target of 1.5m new homes in this parliament.
“The significant additional support provided by our housing guarantee schemes will enable them to access low-cost loans and support the building of thousands of new homes across the country”.
Brian Berry, chief executive of the Federation of Master Builders welcomed the £3bn of support.
“In recent years, small house builders have faced a particularly difficult set of financial challenges. Diversification of the UK’s housing market is essential to deliver the number of homes needed.
“For the government’s plans to succeed, it will be crucial that this lending is available for those small house builders who need it most and can build the homes this country needs.”
