We have been a little spoiled when it comes to housing announcements in recent months but one initiative that has received fairly little fanfare is the announcement by the Labour Government of the establishment of the National Housing Bank (NHB) - a ‘Pufin’ (a public financial institution) and a subsidiary of Homes England.

Is this a ‘gimmick’ or a ‘game changer’ and critically, can we see this accelerating the building of more social and/or affordable houses, which we all know are so desperately needed?

At the time of writing, everything points to this being a game-changer. 

The NHB will be backed by £16 billion of financial capacity (which is on top of the £6 billion of existing finance to be allocated this Parliament) with the aim of facilitating the construction of just under 60,000 homes in the current Parliament and with a longer-term goal of facilitating the development of up to 500,000 new homes going forwards.

The NHB will be able to:

1. provide a wide range of debt, equity and guarantee products to support SMEs to accelerate housebuilding and growth;
2. expand the use of alliances with the private sector (to increase access to finance for housebuilders);
3. support and unlock large/complex sites, which to date have been perceived as too risky to develop; and 
4. crucially, issue some of the £2.5 billion in low-interest loans announced in the Spending Review to facilitate the building of social and affordable homes. 

It is worth noting that NHB is not an isolated initiative. The Labour government has also announced £5 billion of new capital grant funding for infrastructure and land, which is to complement investment from the NHB and ‘builds’ upon the £39 billion investment already announced in the recent Spending Review for a new 10-year Affordable Homes Programme (AHP).   

Greg Reed, Chief Executive of Places for People, has stated that the NHB and AHP are “truly game-changing for the provision of social housing in this country”, and we are inclined to agree with this assessment.

As is always the case with these ‘early doors’ announcements, granular detail is lacking and, as you might expect, various questions remain around things like delivery capacity, timing and governance structures. Nevertheless, additional grant funding, an expanded AHP and low-interest loans from a dedicated, publicly owned bank can only be a positive step forward for social housing providers and could offer a three-part funding package that unlocks new finance and development opportunities for social housing providers for many years to come.

It’s worth noting that only a handful of corporate funders have expressly commented on the NHB announcement to date.  For those that have commented, the reception has been overwhelmingly positive, BUT it is yet to be seen how this ‘new world’ funding ‘menu’ impacts the traditional debt finance products that social housing providers have relied upon for so long.

Let’s watch this space.