I am today updating the House on further steps the Government are taking to deliver our ambitious plan for change milestone of building 1.5 million safe and decent homes in this Parliament.
National Housing Bank
To accelerate house building across England, we intend to establish a new, permanent national housing bank to act as the Government’s investment arm.
Established as a public financial institution, and operating as a subsidiary of Homes England, the new bank will deliver a long-term financial return for the Government, drawing on the approach taken to the national wealth fund. The bank will deploy finance in line with the Treasury’s financial transaction control framework, which will ensure long-term value for money.
By giving Homes England greater autonomy and freedom to flexibly deploy loans, equity and guarantees, the new bank will support additional housing development and reinforce our ongoing efforts to reform the housing market.
Today’s announcement sets out an initial allocation of £16 billion of new financial capacity for the bank—comprising £10.5 billion of investment capital and £5.5 billion of contingent liability capacity that can be used to deploy housing guarantees. The £10.5 billion investment capital package includes £2.5 billion of low-interest loans for social and affordable housing providers to further boost their capacity to invest in new developments.
The bank will offer a broad range of products, including direct lending to SMEs to help them to grow, equity investments to support new platforms that can bring new capital into housing, and guarantees to leverage private investment into complex development projects.
The bank will build on Homes England’s impressive track record of investment. Since October 2016, the agency has deployed over £9.6 billion of capital through existing investment programmes, working alongside delivery partners to attract an estimated £48 billion of private sector investment into the vehicles it supports. This investment will deliver or unlock over 600,000 homes.
The detailed investment strategy for the bank—which will form a key part of Homes England’s overall strategy – will be developed in the coming months and agreed by the Ministry of Housing, Communities and Local Government and HM Treasury. Subject to the development of that investment strategy, our current estimates are that, over the lifetime of the initial £16 billion investment allocation, the bank will support the delivery of over 500,000 homes in all parts of the country and of all different tenures, create hundreds of thousands of job opportunities in the construction sector, and leverage in an additional £53 billion of additional private investment.
The national housing bank will work closely with mayors and local leaders to develop integrated packages of financial support to deliver on the housing and regeneration priorities of local areas, alongside wider land and grant funding. Following this announcement, MHCLG and Homes England will engage mayoral strategic authorities to agree an approach that works best for the needs of each place.