Bank chairman John McFarlane says fund will address ‘vital need’ for new homes
Barclays and the UK government have revealed plans for a £1bn fund to help property developers meet what the bank’s chairman calls a “vital need” for new homes, including social housing and retirement homes.
The UK bank will commit £875m to a new Housing Delivery Fund, alongside £125m from Homes England, the government’s national housing agency. Small and medium-sized house builders and developers will be able to take loans of between £5m and £100m to fund their projects, with a loan-to-value ratio of up to 70%.
The goal is to diversify the housing market, Barclays said in its statement on the fund, adding that almost two-thirds of homes are currently built by just 10 companies. The fund will be open to existing Barclays clients as well as new customers and will prioritise builders of social housing, retirement homes and homes for private rental.
The interest rate of the loans was not disclosed, but Barclays said they would be “competitively priced”.
Barclays chairman John McFarlane said: “There is a vital need to build more good quality homes across the country. 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.”
James Brokenshire, the housing secretary, said: “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 housing market.”
Then-housing secretary Sajid Javid launched Homes England in January as the successor to the Homes and Communities Agency.
The government has set a target of delivering an average of 300,000 a year by the mid-2020s. Its housing white paper, published in February 2017, described the UK’s housing market as “broken”.
In her foreword to that paper, Prime Minister Theresa May wrote that the government’s goal is to “fix this broken market so that housing is more affordable and people have the security they need to plan for the future”.
May went on: “The starting point is to build more homes. This will slow the rise in housing costs so that more ordinary working families can afford to buy a home and it will also bring the cost of renting down.”
She added that diversifying the housebuilding market would involve “opening it up to smaller builders and those who embrace innovative and efficient methods”.