As part of the government's broader plans for housing, communities and local government, the November 2020 Spending Review provides for substantial increases in funding for home building.
National Home Building Fund
The Chancellor has announced funding of £7.1 billion to the National Home Building Fund (NHBF) over the next four years, with the intention of unlocking development of up to 860,000 new homes.
With an estimated 240,000-245,000 new homes needed in England each year, this should stimulate the market.
All homebuilders, from large developers to small builders and regeneration specialists, are eligible for funding through the NHBF.
The core eligibility criteria are:
- There must be a need for NHBF funding for the scheme to progress quickly, or at all;
- Developments must be within England;
- The developer must be a private sector entity which has majority control of the site;
- There must be a minimum of five homes per development;
- The borrower must be a UK registered corporate entity;
- Funding for infrastructure must ultimately lead to development of new housing;
- There must be a clear route to planning consent;
- Funds will not be available where there is unjustified use of leasehold.
Additionally, the NHBF will prioritise funding for projects with value for money for the taxpayer, developments in areas with affordability pressures, potential for early delivery, local support and developments that are in line with broader government policy.
The breakdown of £7.1 billion is as follows:
- £4.8 billion capital grant funding;
- £100 million funding for Non-Mayoral Combined Authorities; and
- £2.2 billion in new loan finance.
As initially envisaged, the NHBF is to provide loans on commercial terms. Loans of £250,000-£250 million are available, with smaller loans for innovative and custom schemes, and terms of up to five years for development and 20 years for infrastructure.
Further details of how grants are to be distributed are awaited.
Applications to the fund should be made direct to the National Home Building fund, at https://homebuildingfund.campaign.gov.uk/, by telephone to 0300 1234 500, by email at email@example.com or by post to Home Building Fund, Homes England, Windsor House, 42-50 Victoria Street, London, SW1H 0TL.
As funding is provided only where necessary for the development, this could be a pathway to secure development funding where traditional finance is not available.
Fieldfisher's residential development specialists Sue Simpson, Dinah Patel and Helen Andrews will be happy to discuss the NHBF in detail with you, including assisting with the application process and providing advice on the all aspects of the transaction.
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