Affordable homes in new towns will be funded through SAHP bids, official confirms

So far, ministers and officials have shortlisted seven sites where large settlements of at least 10,000 homes could go, including several that are essentially urban extensions of cities.

The towns will have a target of at least 20% social rent homes and 40% affordable housing overall, equating to 4,000 homes that will require some form of public subsidy.

Some may also involve setting up development corporations – statutory bodies with a raft of powers to bring forward regeneration – to get them over the line.

The government has previously confirmed it will provide both grant and loans for affordable homes in new towns from the £16bn National Housing Bank (NHB), which launched in April.

Yet just last month, Homes England and the Greater London Authority asked social landlords to re-profile their bids for the first round of large-scale, ‘strategic partnership’ SAHP funding as the programme had been oversubscribed.

This request has already received pushback from the National Housing Federation, the trade body for housing associations, which warned scaling back funding could cut delivery by a quarter in the next three years.

Speaking yesterday, Ms Crofton admitted the first bidding round for the £27bn part of the SAHP overseen by the NHB had been “very popular and oversubscribed”, but added that this had been expected.

Responding to a question on how NHB funding will be used to support new towns, she highlighted that it has introduced products to better support small and medium enterprises (SME), such as an accelerator to enable smaller developers to build multiple sites at once.

Since April the bank has already agreed three SME loans, as well as other deals and equity partnerships, and the Treasury’s control framework allows it to be “flexible” and respond to the needs of partners like social landlords.

In addition, the bank has approval to invest between £20m and £30m in a lending alliance targeted at micro-SMEs – companies that could be “anything from two homes and above”, which would not usually have access to funding.

Ms Crofton also referenced a new housing delivery fund that launched in April with no set criteria or ringfenced funding.

This means it can “respond to the place and to what makes the biggest impact”, she told peers.

Ms Crofton claimed that through its new regional model, the agency is better able to work with SMEs as they “know who the regional players are” and can provide a single point of entry.

“We strongly agree that allowing multiple players like SMEs to develop our sites creates a resilient market,” she said.

“It’s what local places want to lead, and also it delivers the right product.”