Homes England and development finance lending platform expand alliance to boost support for SME house builders

[edit] Homes England and Invest & Fund expand lending alliance

Homes England and Invest & Fund, a growing development finance lending platform, have announced a significant expansion of their Lending Alliance, reinforcing their commitment to supporting small and medium-sized enterprise (SME) developers as part of the government’s plans to deliver 1.5 million new homes over the next five years.

The expanded partnership will now offer development loans up to £4 million, at a maximum 70% Loan to Gross Development Value and maximum 85% Loan-to-Cost. The partnership is projected to facilitate the construction of an additional 600 new homes, building on the 107 homes already supported through the original lending alliance.

In 2020, the Agency announced a seven-year partnership with Invest & Fund, to increase the amount of finance available to SME developers, helping them to grow and deliver more homes at pace. The collaboration created a £25 million revolving fund to enable the support of small builders with construction loans of up to £2.5 million, funding schemes of two homes and upwards, at up to 80% Loan-To-Cost.

[edit] Refinanced agreement alongside direct lending

The refinanced agreement will:

• Increase the fund from £25 million to £47.5 million.
• Extend the term of the fund to March 2030.
• Continue to focus on supporting micro-SMEs.

This ongoing support complements Home England’s existing direct lending offer, which provides development funding to housebuilders building five or more homes a year and follows the £700 million extension to the current Home Building Fund for SME developers announced by the government last December, which will support the delivery of up to 12,000 additional homes.

[edit] Comments from alliance partners

Marcus Ralling, Chief Investments Officer at Homes England, said:

"Small and medium housebuilders play a vital and essential role in driving the delivery of new homes where they are needed most. This refinancing demonstrates our ongoing commitment to supporting the small builders that are crucial to building a diverse and resilient housing sector. By nearly doubling the fund and extending its availability, we’re providing sustained, long-term support to help SME developers grow and deliver more homes at pace."

Robert Burgess, Chairman at Invest & Fund, said:

"Invest & Fund are delighted to be working with Homes England to support SME developers and ensure that they have access to vital fundingto deliver much needed new homesacross the country."

[edit] Long-term public-private partnership to deliver thousands of affordable homes

The press release above follows the separate announcement from November 2024 regarding the new public-private partnership, named Habiko, developed by a pension insurance corporation, a major investor in UK housing and infrastructure, nationwide place maker, Muse, and Homes England. The joint venture plans to deliver 3,000 low-carbon, low-energy affordable homes for the rental market, unlocking institutional investment. Habiko aims to become self-funding over its 12-year lifespan and diversify the supply chain for future efficient housing developments.

Habiko is targeting up to 100% affordable homes for rent for those whose needs are not met by the market, with rents set at 20% below the local market rent. During the 12-year lifespan of the partnership, PIC will have the ability to continue to forward fund the development of the affordable homes and will ultimately own the homes and places they have helped to create through its investment and long-term stewardship approach.

The homes will be built across England in areas of high demand for this type of housing. The developments aim to create social value for these communities, including boosting the local economy through job creation and new skills to drive green innovation. The homes will be in accessible locations, close to employment opportunities and be designed to help residents save money on their energy bills.

Comments on the initiative from the partners

Tracy Blackwell, CEO of PIC, said: "Meeting the UK’s affordable housing needs is a challenge that is best met through effective collaboration between government, developers, and private investors. Habiko is a great example of public-private partnership, which brings forward thousands of low-carbon, low-energy affordable homes. PIC has invested around £4 billion in social and affordable housing to date, helping provide the secure, long-dated, inflation linked cashflows to back the pensions of its policyholders over coming decades, creating considerable social value."

Phil Mayall, Managing Director at Muse, said: "The government has set out a bold and ambitious challenge to deliver a significant number of new affordable homes over the next five years. Working together with PIC and Homes England, we can bring together our collective resources and unique experience to deliver thousands of low carbon and low energy homes which, by working alongside our local partners, meet the needs of communities across the country.”

Peter Denton, Chief Executive of Homes England, said: "Attracting institutional investment into the housing sector is critical to build the new homes the country needs. This partnership supports our partners’ objective to deliver low carbon, low energy, affordable homes, bringing together the technical expertise and capability of Muse with the financial capacity of one of the UK’s largest pension fund insurers, cementing PIC as a significant force in delivering affordable housing."

For further information see News story Long-term public-private partnership to deliver thousands of affordable homes Dated 4 November 2024.

The first sections of this article were issued via press release as 'Homes England and Invest & Fund boost support for small housebuilders' 16 January 2025.

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