Small and medium-sized builders will be able to apply for construction loans of up to £10m under a new £250m fund announced by the government’s housing delivery agency today.
The government’s housing accelerator fund, which will be delivered by Homes England and United Trust Bank, will provide builders with construction loans between £1m and £10m at a loan-to-gross-development-value of up to 70%.
The aim of the fund is to increase the finance options available to smaller builders in order to diversify the housing market in England.
Applications are being accepted from today and prospective borrowers are being urged to contact United Trust Bank.
It comes less than six months after Homes England announced a separate £25m fund under which builders can apply for construction loans of between £400,000 and £2.5m at up to 80% loans to cost.
Homes England also aims to support SME builders by making changes to its land disposal process in order to make it easier for smaller developers to secure public land.
Gordon More, chief investment officer at Homes England, said: “The housing accelerator fund is open for business from today. In line with Homes England’s commitment to support SMEs, it will help smaller builders get on and build now, as well as improve the lending landscape for SMEs by driving competition in the market, improving choice and encouraging innovation.
“United Trust Bank has consistently supported house builders of all sizes and is an experienced and capable lender. We’re pleased to be collaborating with them on this long-term partnership and look forward to seeing the fund support the delivery of new homes across the country.”
Noel Meredith, executive director of property development at United Trust Bank, said: “SME house builders have a vital role to play in delivering the UK’s new housing needs and United Trust Bank has amassed considerable experience helping such businesses to complete thousands of successful developments.
“This is an exciting new partnership with Homes England which will make a real difference to both long-established and newly formed development companies requiring competitive funding and the long-term support of a knowledgeable and experienced specialist lender.
“This alliance will help to reinvigorate and increase diversity in the SME housebuilding sector, and boost housing supply in areas under the greatest affordability pressures.”
Housing minister Christopher Pincher said: “It is a top priority for this government to build the homes this country needs and it is vital for our economic recovery that we support as many as possible within the housebuilding industry to deliver these homes.
“I welcome the announcement of the alliance between Homes England and United Trust Bank – this is win-win. It will not only support our commitment to build more homes, but also give smaller developers easier access to finance.”
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