Reeves to invest billions in a new housing bank for UK builders
The government has announced plans to create a new national housing bank to encourage private investment and boost housebuilders.
It says the bank, which will provide £16bn of new public investment, will unlock over £53bn of private investment over the next decade and help to build hundreds of thousands of homes.
The £16bn investment includes £10.5bn in investment capital – £2.5bn of which was pledged for low-interest loans for housing associations in last week’s spending review – and £5.5bn in housing guarantee capacity.
The announcement follows a £39bn investment in the next Affordable Homes Programme (AHP) – running from 2026-2036 – which offers grants to affordable housebuilders.
Chancellor Rachel Reeves said the bank will unlock a “wide range of sites”, particularly those which “struggle to get up front lending given their risk and complexity”.
“It will also support SME lending by establishing additional lending alliances with private sector partners and leverage in additional capital and expertise, including providing revolving credit facilities to help SMEs to grow and build out their housing pipeline more quickly,” Reeves added.
The housing bank will function as a subsidiary of Homes England, the government’s housing and regeneration agency.
“Establishing the National Housing Bank… builds on the Agency’s expertise at providing a wide range of finance to partners and places to unlock the delivery of new housing and mixed-use schemes,” Homes England Chair Pat Ritchie said.
“The National Housing Bank also responds to calls from the housing sector, mayors and local leaders to increase the scale of available public and private finance for housing and regeneration,” Ritchie added.
The sector is ‘poised and ready to deliver’
Private and affordable housebuilding has been hamstrung since the 1980s by a lack of funding and a difficult planning system.
Cost hikes and skills shortages over the last few years have only exacerbated the issue.
But Pocket Living managing director Paul Rickard has called the government’s recent policies on housing a “step change”.
As well as the AHP investment, the government has invested millions in skills, streamlined the planning system and encouraged building on new types of land.
“We’re changing the engine, and we’re adding an extra gear to the car. It’s going to be enough to shift that dial on housing delivery,” he said.
Rickard added that the AHP investment will “unblock private developers” by allowing them to purchase more of the affordable housing that private developers are building.
Is it enough?
Other experts have said the government’s changes are a “great start” but that simply building more homes will not solve the affordability crisis of UK housing.
“The government does not control housing supply. Housebuilders do. They are looking to maximise profit and therefore run a tight ship when it comes to maintaining the supply and pricing level of new homes,” Dr David Crosthwaite, chief economist at BCIS, said.
Referring to the AHP investment, he said: “Building 1.5m homes is still a big if. More funding over 10 years is a contribution, not a guarantee of delivery.”
Paul Butterworth, Legal Director in the Affordable Housing team at national law firm Foot Anstey, said that because of the “number of moving parts” in housebuilding, “changes required to speed up delivery… is likely to take longer than anticipated.”
A lot depends on whether housebuilders can trust that the demand will be there for their properties – either from Brits private houses, or from housing associations for their affordable houses.
AJ Bell head of financial analysis Danni Hewson said that a further drop in interest rates would therefore be a “clear tailwind” for the sector.