Barclays and the Ministry of Housing, Communities and Local Government (MHCLG) have entered a partnership to provide £1 billion in funding to small and medium size house builders.
Called the Housing Delivery Fund and organised via MHCLG’s Homes England agency, it will see Barclays offer financing of between £5 million and £100 million to individual companies in order to help fund developments.
House builders will have to be either existing bank customers or sign up to join its business banking arm. The deal will see Barclays providing £875 million of the cash in addition to £125 million provided by Homes England.
“This is a fantastic opportunity to not only get more homes built but also promote new and innovative approaches to construction and design that exist across the [property] market,” says Housing secretary James Brokenshire.
In return for the government funding, developers will be offered more generous lending terms than they might otherwise receive from many banks.
This includes a loan-to-cost ratio of 80% and loan-to-value ratio of 70%, whichever is the more viable.
The deal is designed to support the government’s more recent pledge to support the UK’ smaller developers, many of whom went out of business during the financial crisis. This left the larger developers in a even more dominant position than before.
“There is a vital need to build more good quality homes across the country,” says Barclays’ Chairman John McFarlane (left).
“This £1bn fund is about helping to do exactly that by showing firms in the business of house building that the right finance is available for projects that help meet this urgent need.”