National Housing Bank and new capital grant
funding
Statement made by , Minister of State for
Housing and Planning
I am today updating the House on further steps the government is
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 housebuilding 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 of
£10.5 billion of investment capital and £5.5 billion of
contingent liability capacity that can 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 (MHCLG) 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.
MHCLG will work with the Mayor of London to establish a City Hall
Developer Investment Fund – supporting London's ambition to build
over 80,000 homes per year, and support housing regeneration
around London Euston. We will also extend the successful Greater
Manchester Housing Investment Fund, which has supported over
10,000 homes since 2015.
The creation of the National Housing Bank will not change the
delivery of Homes England's existing investment programmes or
impact arrangements for customers with Help to Buy loans provided
by Homes England.
I must make clear that Homes England is not currently designated
as a Public Financial Institution. However, the government will
designate a subsidiary of Homes England as a Public Financial
Institution once established in line with the government's
Financial Transaction Control Framework. MHCLG, HM Treasury and
Homes England will work together to agree the changes to Homes
England that are needed prior to establishing the Bank.
The name “National Housing Bank” is provisional and will undergo
all normal regulatory approvals before the Bank is
established.
New capital grant funding for investment in
infrastructure and land
In many cases, government grant funding is critical to making
large scale, complex and transformational housing regeneration
and infrastructure projects viable. That is why, alongside the
intention to establish the National Housing Bank, we are
announcing £5 billion of new capital grant funding for
infrastructure and land.
This additional grant funding will be administered by a new,
single National Housing Delivery Fund that will complement
investment from the National Housing Bank. This Fund will be
fully operational from 1 April 2026.
MHCLG and Homes England will work with Mayors and local partners
to understand priorities for this investment and will set out
further detail on funding later this year.
