The Housing Delivery Fund, which launched today, is aimed at helping SME developers build homes for rent or sale to help drive a more diverse range of providers. Around two-thirds of homes are built by 10 companies.
Under the scheme, Barclays will contribute £875m and the government's delivery agency Homes England £125m to the total pot for borrowing.
The scheme is the latest to be unveiled as the government attempts to ramp up housebuilding to meet its target of 300,000 new homes a year.
Under the new fund, developers and housebuilders will be able to apply for loans between £5m and £100m over a maximum of a five years, with funding of up to 80% loan-to-cost on schemes and 70% on loan-to-value.
It is understood interest rates charged on the loans will be between 5% and 10%, but could be even lower than 5% depending on the scheme.
Speaking to Inside Housing, Dennis Watson, head of real estate at Barclays, said: "Where housing associations are undertaking commercial activity through their commercial arms, or in a joint venture with an SME developer, we would be very keen to hear from them. We think the flexibility and pricing (on the loan scheme) will be attractive for them."
Barclays offers developers finance of up to 65% loan-to-cost and 55% loan-to-value.
Mr Watson, who previously spent six years as director of Barclays' social housing team, said the bank is keen to help diversify the types of housing providers. He added: "We think the housing associations have a huge role to play and the capability to step into the market."
He said the bank is keeping an "open mind" on the types of schemes it will help fund with borrowing and particularly encouraged projects using innovative methods such as offsite construction. "As an industry we need to do things differently," he said.
In last November's Budget, the government said it would favour offsite manufacturing on all publicly funded projects from 2019.
Housing secretary James Brokenshire said today the new fund was "a fantastic opportunity to not only get more homes built but also promote new and innovative approaches to construction and design that exist across the housing market".
The scheme comes two years after the launch of the government's £3bn Home Building Fund, which has similar aims. However, it emerged in February this year the fund had missed its delivery target by 25%.
Mr Watson said success for the Housing Delivery Fund would be getting the £1bn allocated over the next two to two and a half years. Based on the current UK average house price this would see 6,250 homes being built.
Ed Lister, chair of Homes England, added: "The Housing Delivery Fund demonstrates Barclays' commitment to the residential sector and will provide a new funding stream for SME developers to help progress sites and deliver more affordable homes across England."
Original link - Inside Housing
