With homeownership now a distant dream for many, the government has launched a new funding scheme to increase affordable rental stock in the UK. Some GBP 10 billion in loan guarantees will be made available in the hope they will get Britain building and deliver tens of thousands of homes to rent. Ministers believe the guarantees will not only enhance the potential of the growing private rental market but unlock funding to build thousands of affordable homes to rent.
Heralded as 'groundbreaking', the schemes will enable housing providers to borrow money to invest in creating new buildings on more favourable terms. This will be delivered through the Affordable Housing Guarantee Scheme, run by Affordable Housing Finance, part of The Housing Finance Corporation. The government will guarantee up to GBP 3.5 billion of debt for Affordable Housing Finance to build new homes to rent out to families in need. In combination with GBP 450 million in government grants, the scheme has the potential to deliver up to 30,000 new affordable homes to rent. This is in addition to the 170,000 new homes already being delivered by 2015.
The second part of the new guarantees will be delivered through the Private Rented Sector Guarantee scheme. Worth GBP 3.5 billion, the funding is hoped to encourage greater institutional investment by offering guarantees directly to housing providers. This is in a bid to move away from the current market model, which is currently dominated by individual landlords. Under the scheme, organisations and developers looking to manage homes specifically for private rent will be able to borrow money to invest in affordable rates.
Housing minister Mark Prisk said: "The GBP 10 billion Housing Guarantees Schemes are now open for business, with a groundbreaking new offer of low-cost lending to get spades in the ground, create new jobs and deliver thousands of new homes specifically for rent. With the government’s backing, investors can now unlock billions of pounds to build high quality homes for private and affordable rent."
- Monday 24 June 2013