The next step towards boosting home building

The government has announced the next step in its ambitious plans to build 1.5 million homes over the next five years.

An additional £3 billion will be available in housing guarantees to help builders apply for more accessible loans from banks and lenders.

Government guarantees reduce risk for lenders and encourage them to increase the supply of credit for housebuilders.

Access to credit for homebuilders is a key constraint on growth in the sector, so guaranteeing more lending should encourage more construction.

The move includes doubling the ENABLE Build scheme to £2 billion so smaller housebuilders and firms can support the delivery of over 10,000 new homes, including more student accommodation and specialised housing for older people, in areas most in need.

Build-to-Rent developers will also see the Private Rented Sector Guarantee Scheme reopen at the end of the year, with nearly £2 billion available to ramp up housebuilding.

A broader variety of projects will be eligible to access additional lending, so more housing projects can be completed without unnecessary delays.

Based on the performance of the schemes so far, the government estimates that the increase in guarantees would support over 20,000 more homes.

Housing and planning minister, Matthew Pennycook said: “SME housebuilders and build-to-rent operators have a crucial role to play in delivering the government’s target of 1.5 million 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 (FMB), said: “SME house builders have a crucial role to play in helping to deliver the government’s ambitious target to build 1.5 million new homes over the next five years.

“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.”

The move follows the latest announcement about the Local Nutrient Mitigation Fund.