Sunday, 01 March 2015

£10 billion guarantees fund opens for business

The government is inviting expressions of interest in a £10 billion guarantee scheme to support house building, just one day after announcing the initiative.

Both the £10 billion guarantee and a £200 million pot to fund the construction of homes for private rent are open for expressions of interest from today.

Potential bids for a £300 million scheme to fund affordable housing are expected to be invited shortly.

Despite the call for interest, much of the detail of the schemes has yet to be announced.

The Communities and Local Government department said the £200 million fund would be an ‘equity loan scheme’ but details of how much would be available per property, or how the scheme would operate would not be available until later in the autumn.

A spokesperson said more detail on the £10 billion guarantee scheme would not be available until bidding opens later in the year.

Legislation has been published that would allow the government to guarantee the £10 billion of housing loans, and £40 billion of infrastructure loans announced in July. The government said it would push through the Infrastructure (Financial Assistance) Bill ‘to ensure it can take forward discussions with eligible commercial parties as soon as possible’.

The government yesterday announced a range of measures designed to increase house building.

As well as the funding pledges it promised to introduce legislation to allow section 106 schemes where the affordable housing commitments are holding up wider developments to be referred to the Planning Inspectorate, which will have the power to overrule local authority decisions.

Ministers also promised to speed up the release of public sector land for development, and extended the Firstbuy shared equity scheme for another two years by putting in £280 million.

In total the initiatives announced yesterday are expected to deliver up to 70,000 homes and 140,000 jobs.

Readers' comments (15)

  • Rick Campbell

    In the scheme of things £300m doesn't seem a great deal of stimulus.

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  • Rick Campbell

    Short term solution?

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  • Rick, Rick, Rick £300M is great... it's not a problem; according to Barratt Developments

    "...Britain faces a housing shortage of one million homes by 2015 as construction fails to keep pace with the growing population"

    Read more:

    So that's £300m and I need 1m homes, £300 per house then? Easy! I'll just call up my mate Mate Smith, Borrow his TARDIS nip back in time to 1947 and throw up a quick million homes, see I could write housing policy for the govt.....

    Except of course mine is probably more realistic - Pretty scary that!

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  • Gavin Rider

    Jeff - As I understand it, this is not money that is being provided to pay for housing, it is mainly a "guarantee scheme" that will underwrite the risk faced by providers. Hence, the amount of the guarantee does not have to cover the cost of the construction.

    The builders still have to fund their own developments by borrowing from the banks - the guarantee will only operate if they find themselves unable to pay off the loan due to problems faced when it comes to selling the properties.

    The government says "the Government will invite bids to provide up to an additional 15,000 affordable homes through the use of loan guarantees, asset management flexibilities and capital funding."

    It doesn't say directly how many more affordable homes it will provide funding for - this announcement is typical political nonsense making it seem as if they are doing something significant when in fact they are just fudging the numbers. Most if the stimulus is going to the private rented sector


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  • The negativity about any announcement or news story from posters on this forum is getting boring

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  • We need to rethink the way we build houses, the social, economic and environmental costs and benefits (both positive and negative) that could be used as cross subsidy, types of tenure including flexible tenure over the long term. Fine, policitians will always focus on the next election, but surely someone in govt must be planning for the next 10 to 20 years?

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  • Gavin Rider

    Techno Dave - then say something positive, then.

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  • Chris

    As posts are now permitted on this item:

    How extraordinary that for a policy that the government does not know how it will operate, what it is for, or how it may be best used, they are now inviting people to enter their bids for the unknown.

    This is like a child's lucky dip at a summer fete - although for much higher stakes!

    Sorry that is not very positive Techno Dave, but what is there that is positive from the reannouncement and announcement. The government has developed a record of knee-jerk reactions, announcements ahead of thinking, and actions without considering the imapact. This is just another of those, without any clarity on the additional investment value even.

    If I'm missing the point though I look forward to being directed towards it.

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  • Note the shift towards private rented accommodation - the least popular, most costly, most unstable form of accommodation. The type of accommodation that gave rise to both social housing (e.g. council homes, housing associations) and owner occupation (e.g. the building society movement). There are the long term answers to our housing crisis - all of which would cost the country less money (because the nation's money is the nation's money regardless of whether it is labelled private or public) than subsidising over-priced, insecure privately rented accommodation.

    Techno Dave - I would simply love to respond positively. I simply can't to a policy announcement designed in part to bolster and subsidise the worst form of tenure and in part to use public resources to go where our brave knights of the private sector fear to tread in places where there might be some risk involved. As we all know, British private sector wealth creators and risk takers don't actually want to take any risks or indeed create any wealth. They simply want a state backed and guaranteed licence to extract wealth from everyone else. Landlordism perfected.

    Feudalism returns. All hail our reborn lordsand masters.

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  • I think a positive move would be to apply VAT to all new housing and do away with the zero rating....

    Grant funding can never be enough and ultimately only ever ends up supporting artificially high land values.

    Do away with ALL grant funding for housing development; apply VAT to the build costs and allow the market a year or so to adjust to the new land values (Ultimatley long terms house prices will not go up, the land will come down to meet the new cost requirements meaning more relaistic land values). Once the new land market exists; then offer VAT breaks and zero rating on land for social housing which will then make private development of social housing relatively attractive compared to the speculative market.

    Downside; some big developers will go bump, a year to eighteen months of termoil in the housing sector because of the "confussion" caused... yeah well... its not like we're hitting any kind of targets now anyway, how much worse is a shorterm collapse and quick recovery (market adjustment) compared to a slow steady endless decline and billions of grant and guarentee achieving little.

    Upside; increased tax revenue; zero grant costs, land price realism; and a potential 'fire sale' of land and the massive impetus to get build going before the new tax implentation giving a turbo-boost to the sector at the moment of biggest decline.

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