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The housing sector has broadly welcomed the government鈥檚 announcement of a new housing bank, with sector leaders hopeful it will boost regional development and funding for SMEs.

The Ministry of Housing, Communities and Local Government (MHCLG) last night confirmed it would set up a 鈥淣ational Housing Bank鈥� as a subsidiary of Homes England.

It will be designated as a public financial institution, meaning it can issue government guarantees directly and have greater autonomy to make long-term investments.

The bank will be backed with 拢16bn of financial capacity in addition to 拢6bn in existing guarantees. The government believes it can lever in 拢53bn in additional private funding to deliver more than 500,000 homes. It will issue loans and guarantees and make equity investments.

The government confirmed an additional 拢5bn for infrastructure. The bank will also deploy some of the 拢2.5bn in low-interest loans announced at the spending review to support the building of affordable housing.

Housing association bosses in London are hopeful these will be used as a part of which aims to alleviate a short term balance sheet squeeze in the capital.

MHCLG is intending for the bank to support SMEs to accelerate housebuilding. It believes it will enable the expansion of lending alliances with the private sector and unlock larger and complex sites.

It is understood some of the 拢16bn may be devolved to the Greater London Authority and Mayoral Strategic Authorities in other parts of England. Homes England will work with Mayors and local leaders to develop packages of financial support to deliver their housing and regeneration priorities.

Angela Rayner, deputy prime minister and housing secretary, said: 鈥漁ur foot is firmly on the accelerator when it comes to making sure a generation is no longer locked out of homeownership 鈥� or ensuring children don鈥檛 have to grow up in unsuitable temporary accommodation, and instead have the safe and secure home they deserve.鈥� 

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This morning, sector leaders have been reacting positively to the housing bank launch which follows

Megan Hinch, policy manager at Chartered Institute of Housing, said the institute welcomes the bank but added: 鈥淚t is crucial that this initiative is adequately resourced, with clear and consistent processes, culture and capacity to ensure speedy decision-making for providers hoping to build.鈥�

Patrick Murray, executive director, policy & external relations at the Northern Housing Consortium, said: 鈥淲e鈥檝e consistently highlighted the importance of local solutions to meet local needs. We鈥檙e pleased the announcement includes plans for Homes England to work with Mayors and local leaders to develop integrated funding packages which address local housing and regeneration priorities.鈥�

Brian Berry, chief executive of the Federation of Master Builders said a lack of finance 鈥渋s often cited as one of the top five issues holding back SME development鈥�.

鈥淎 new clear pathway like the National Housing Bank will give developers confidence to borrow. This is a bold change and sorely needed if the Government is to deliver its 1.5 million housing target. 鈥淲hile details are still to be tied down it will be important that the new bank is able provide suitable finance options for smaller and micro house builders to help local economies thrive.鈥�

Greg Reed, chief executive at Places for People, said 鈥淐ombined with an expanded new Affordable Homes Programme, transformative new measures like this will stimulate the required momentum on housebuilding and enable providers like Places for People to play a huge part in helping Government meet its 1.5m new homes target.

鈥淭his is another huge brick in the road and we will keep talking to Government, while also exploring complementary solutions to financing our sector鈥檚 clear ambition of delivering lasting change for customers and communities.鈥�

Kate Henderson, chief executive of the National Housing Federation, described the bank as a 鈥� welcome, innovative initiative鈥�.

She said: 鈥淎longside the ambitious new Affordable Homes Programme and the long-term certainty provided by the new rent settlement announced at the Spending Review, the 拢2.5bn low-cost loans for social housing providers will bolster our sector鈥檚 capacity to get building.鈥� 

Housing Today and G15鈥檚 State of the Capital report

Providing new social tenancies for the 323,800 households on London鈥檚 waiting lists would inject at least an additional 拢7.7bn a year into London and the UK鈥檚 economy.

However, while social housing providers and ministers are both aware of the need for more affordable housing, both housing associations and the government have balance sheets constraints.

This inaugural State of the Capital report, produced by Housing Today in partnership with G15, looks at several ideas that could be adopted to help the sector build much-needed affordable housing in London during these difficult times.

The report is written by Carl Brown of Housing Today, in collaboration with the G15.