Builders and investors in the UK property market need to just pick up the phone and contact the Homes and Communities Agency to find out how to get a share of the new £3 billion Home Building Fund.
More details have now been released of the new fund aimed at boosting the number of new homes being built in the country which they announced earlier this week.
A guide has been issued by the Homes and Communities Agency which has responsibility for managing the fund which is aimed not just at big builders but also small builders, community builders, custom builders and regeneration specialists.
Homes and Communities Agency chief executive officer Mark Hodgkinson said that the fund offers the industry flexible development and infrastructure finance. ‘We’re open for business right away. Builders and investors just need to give us a call to start discussing funding for new homes,’ he explained.
‘Our dedicated team will also provide expert ongoing support to new entrants to the sector and those companies proposing innovative solutions to speed up house building,’ he added.
The fund is made up of two parts. The Development Finance Loan funding aims to meet the development costs of building homes for sale or rent, the Infrastructure Finance Loan funding is for site preparation and the infrastructure needed to enable housing to progress and to prepare land for development.
Loans can be tailored individual circumstances and can include community led housing projects, serviced plots for custom and self-builders, off-site manufacturing, new entrants to the market and groups of small firms working in consortia to deliver larger sites. A range of non-financial support is also available for larger infrastructure schemes to help overcome barriers to schemes progressing more quickly.
The loans will appropriate security and loans will be typically secured against property assets. Loans of £250,000 to £250 million are available with smaller loans considered for innovative housing solutions and serviced plots for custom builders.
The guide also reveals that typical terms will be up to five years for development finance and up to 20 years for infrastructure loans with interest is payable at transparent, pre-agreed variable rates. Sales income can be recycled to minimise the loan request and the finance is available to draw down up to 31 March 2021.
Applicants will need to demonstrate that without the funding the scheme would not progress as quickly, or at all and developments must be in England. The borrower must be a private sector entity which has majority control of the site and development projects must build a minimum of five homes.
The guide also says that the borrower must be a UK registered corporate entity, infrastructure projects must ultimately lead to the development of new housing and the minimum investment the fund will make is £250,000, except in the case of innovative housing solutions and serviced plots for custom builders.
Overall the fund will provide £1 billion of short term loan funding to be used for small builders, custom builders, and innovators, delivering 25,000 homes in the short term and £2 billion of long term funding for infrastructure to be used to unlock a pipe line of up to 200,000 homes over the longer term with the emphasis on developments on brown field land.