Builders and investors: would you like a share of £3Bn?

 

Finding it hard to find property development finance for your project(s)?  Maybe it just got a whole lot easier – pick up the phone and contact the Homes and Communities Agency to find out how to get a share of the new £3 billion Home Building Fund.

Details have been released of the new fund aimed at boosting the number of new homes being built in England which they announced earlier this week.

The guide has been issued by the Homes and Communities Agency which has responsibility for managing the fund which is aimed not just at big builders but small builders, community builders, custom builders and regeneration specialists too.

What exactly is the Home Building Fund?

We are told it is a flexible source of funding administered by the Homes and Communities Agency (HCA) on behalf of government.

It is meant to meet the development costs of building homes for sale or rent.  It can also be used for a site’s infrastructure (e.g. site preparation ready for development).

How does the Home Building Fund work?

Successful applications will be eligible for loans of £250,000 – £250 million (smaller loans available for innovative housing solutions and serviced plots for custom builders).

Typical loan term of upto 5 years for development finance and 20 years for infrastructure finance

Finance will be available until 31st March 2021, giving you just under 4.5 years to utilise the scheme.

What are the interest rates? We do not know, these will be discussed with each applicant and will depend on the type of funding requested.  The guide does state the loan would be applied at commercial rates and an arrangement fee would be charged.

Who can apply?

Finance is available to all private sector organisations involved in delivering new homes and the provision of enabled sites ready for residential led schemes.

The Fund has a few core eligibility criteria:

  • applicants will need to demonstrate that without this funding the scheme would not progress as quickly, or at all
  • developments must be in England
  • the borrower must be a private sector entity which has majority control of the site
  • development projects must build a minimum of 5 homes
  • the borrower must be a UK registered corporate entity
  • infrastructure projects must ultimately lead to the development of new housing
  • the minimum investment the Fund will make is £250,000, except in the case of innovative
  • housing solutions and serviced plots for custom builders

At the point at which a loan offer is made, applicants are normally required to have a controlling interest in the land and a clear route to achieving planning consent.

Applicants will also need to demonstrate that without the funding the scheme would not progress as quickly, or at all and developments must be in England. The borrower must be a private sector entity which has majority control of the site and development projects must build a minimum of five homes.

I rang the HCA to seek confirmation on whether the fund is available for commercial conversions as well as new build property developments.  I am pleased to say it is.  So long as you are increasing the number of residential homes (which includes flats and apartments, not just houses) by a minimum of 5 units you may be eligible.

Homes and Communities Agency chief executive officer Mark Hodgkinson said that the fund offers the industry flexible development and infrastructure finance. ‘We’re open for business right away. Builders and investors just need to give us a call to start discussing funding for new homes,’ he explained.

Overall the fund will provide £1 billion of short term loan funding to be used for small builders, custom builders, and innovators, delivering 25,000 homes in the short term and £2 billion of long term funding for infrastructure to be used to unlock a pipe line of up to 200,000 homes over the longer term with the emphasis on developments on brown field land.

For more details visit: https://www.gov.uk/homebuildingfund

Or contact the HCA on 0300 1234 500 or by email: homebuildingfund@hca.gsi.gov.uk

 

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Oliver - please sir, can I have some more

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