The National Housing Bank has opened its doors for business, aiming to accelerate the delivery of 500,000 homes and attract about £53bn of private investment into the residential sector.
The new bank comes under the umbrella of the government’s housing and regeneration agency, Homes England, and will work with housebuilders, developers, investors and registered providers to use up to £16bn of loans, equity and guarantees to boost housing development.
Peter Vernon, chair of the National Housing Bank, described it as a new public institution that would be permanently capitalised, making it very different from the funding Homes England has been delivering up until now.
“Its aim is to crowd-in investment,” he said.
Over the next 10 years, the government estimates that the bank could unlock more than £53m in private investment.
The bank’s permanent capitalisation means it will “act more like a commercial entity than a government department”, James Murray, chief secretary to the Treasury, said at the National Housing Bank’s launch event.
Home Builders Federation chief executive Neil Jefferson told Construction News that the permanent nature of the bank’s capitalisation was a fundamental change in the funding framework of Homes England.
“It’s very early days, but this is a great advancement on what we’ve had previously, in terms of the permanent nature of the housing bank [and its] ability to take long-term views, which I think is more likely to be able to support SME housebuilders,” he said.
One of the central functions of the bank will be to de-risk parts of the housing market that fail to attract significant amounts of private investment.
According to National Housing Bank chief executive Simon Century, it will support delivery “at scale and act at pace” by providing government-backed finance to unlock projects that the market cannot do by itself because of the risk implications.
“It’s de-risking in different types of ways,” Century told CN. “Some of it is actually just verbal support and some of it is putting hard money alongside them to make sure they have the confidence they need to be investing at the scale that we think they want to.”
Against the backdrop of a stuttering housebuilding market and wider economy, Homes England chair Pat Ritchie said it was the perfect time to launch the National Housing Bank.
“We certainly are working on the basis that the bank will have an important role to play in ensuring that we maintain delivery within whatever happens in the market,” she told CN.
“And the flexibilities that we have in the bank, where we can come alongside the private sector, put investment in to support stalled sites, [plus] the work we can do around loan guarantees and other products quickly, within a flexible financial framework, are really important in terms of our ability to respond to whatever happens in the market.”
One of the first schemes to come under the National Housing Bank is a new partnership with insurance giant Aviva, which aims to build high-quality family homes for rent in underinvested urban areas. The partnership has an initial investment commitment of £100m, with sites in Liverpool and Manchester.
Ultimately, Aviva and the National Housing Bank will work with Place Capital Group to develop about 3,300 homes on underused brownfield sites in various regional towns and cities.
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Matthew Davies