A government initiative to provide infrastructure finance to unlock land for 200,000 houses is 25 per cent short of its target, Construction News can exclusively reveal.
The £3bn Home Building Fund (HBF) was launched by housing secretary Sajid Javid and chancellor Philip Hammond in October 2016, offering loans to private developers.
Out of the £3bn made available, £2bn was allocated to finance the necessary infrastructure to prepare sites for projects that would “unlock a pipeline of up to 200,000 homes”.
According to data obtained by CN under the freedom of information request, the infrastructure fund is on course to deliver 50,000 fewer homes than the intended target.
As of the 21 December 2017, Homes England has provided £894m of loans for infrastructure works on 20 projects, which between them are expected to facilitate 68,240 homes. This works out at £13,113 per unit.
At this cost per unit, the fund’s £2bn pot will facilitate developments that will deliver just over 150,000 homes – a 25 per cent shortfall on the original 200,000 target.
Labour MP for Warwick and Leamington Matt Western said the financing was another example of the government’s inability to deliver on housing.
He said: “It’s welcome that the government wishes to stimulate greater housebuilding, but the failure of the Home Building Fund to deliver on its promises once again demonstrates this government’s inability to deliver on housing.
“We are experiencing a severe housing crisis, with rising homelessness and whole generations of people now unable to get a foot on the housing ladder.
“It’s vital that government supports private housebuilders but ultimately, I believe a mass council housing building programme has to be a big part of the solution and we need investment to make that happen.”
A Homes England spokesperson said the fund was launched with the goal of unlocking land for “up to” 200,000 homes.
A spokesperson for the Ministry of Housing, Communities and Local Government said: “Since its launch in October 2016, the £3bn Home Building Fund has received high levels of demand and made significant progress in contributing to increasing housing supply across the country.”
The data also reveals that when the £2bn pot for infrastructure finance was unveiled in October 2016, £536m of these loans had already been issued over the previous year-and-a-half through other initiatives, including the £1bn Large Sites Infrastructure Fund.
The earliest of these pre-existing loans was one for £9.4m awarded for a bridge in the East Midlands, which dates back to February 2015.
HBF loans are available to any private sector organisation, including housing associations, with brownfield developments and estate regenerations prioritised.
The fund offers loans from £250,000 to £250m with repayment terms up to 20 years and interest repayable on a pre-agreed variable rate (bank rate plus a percentage).
Associated infrastructure works funded so far include bridges, remediation, roads, demolition, groundworks, drainage and utilities.
Alongside the £2bn for associated infrastructure, £1bn was allocated for developer finance for new-build housing when the fund was launched in October 2016.