A new government partnership with Barclays has been announced by Housing Secretary James Brokenshire. It will be offering development finance to small- and medium-sized housing developers. The £1 billion Barclays partnership, launched last week as the Housing Delivery Fund, is an attempt to diversify the range of housing providers, although developers applying will be expected to have a track record on delivering projects on time and on to budget. Brokenshire says the new fund will be looking to promote innovative methods of housing delivery, though not exclusively. The government has already made it clear that it wants to prioritise offsite manufacturing in publicly funded projects from next year.
Homes England, which is committing £125m to the funding pot, will administer the scheme and provide funding between £5m and £100m for new homes, including social housing, retirement living and apartments to rent. Though a detailed prospectus has yet to be published, Barclays is reported to be looking at raising its usual limits of 65% loan-to-cost and 55% loan-to-value to 80% and 70% respectively, significantly reducing the amount of non-bank finance that developers need to find.
The larger of the two, the £1.3 billion Land Assembly Fund, will be used to acquire land needing work and get it ready for the market, making it less risky for developers to invest in and start building. This will be a hands-on programme for Homes England, targeting large development sites.
The announcement offered a site in Burgess Hill in Sussex as an example, one which had lain undeveloped for years. Homes England bought the land and will deliver infrastructure, including roads, schools and doctors’ surgeries, to facilitate a plan for 3,000 new homes.
Meanwhile the £630m Small Sites Fund will provide grant funding to speed up infrastructure provision for smaller sites and is aimed specifically at public land owners and local authorities. For public land owners that are struggling to develop their own sites, the Fund will provide grant funding to enhance the attractiveness of sites for developers by providing the necessary infrastructure for house building.
In London the government will work directly with the Greater London Authority to target funding from both the large and small site funds.
Will Wimshurst will present a CPD session on ‘How to set up and run a property development business’ at ‘Guerrilla Tactics 2018: Expanding Practice: Navigating the architecture of planning, procurement and property’, which takes place at the RIBA on 13–14 November 2018.
Thanks to Will Wimshurst, Director, Wimshurst Pelleriti.
By Neal Morris. This is a Professional Feature edited by the RIBA Practice team. Send us your feedback and ideas
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