The Homes and Communities Agency has opened bidding for a £120m housing fund for older people and those with disabilities or mental health problems.

Today the HCA, which manages the government’s development programme outside London, started inviting bids for the second round of the Care and Support Specialised Housing Fund.

The pot of money, which is funded by the Department of Health but managed by the HCA, is designed to help older people and those with disabilities or mental health problems to live more independently.

It is intended specifically for affordable housing, but it also aims to speed up private rented sector housing through the provision of mixed tenure developments.

The £101m first tranche of funding was announced for 86 providers in July 2013.

The latest round of funding will give priority to housing for adults with mental health problems.

Care minister Norman Lamb, said: ‘Well-designed and high-quality specialised housing is a vital part of improving the health and wellbeing of many people.

‘Phase 2 of this fund will increase the range of housing options available, particularly for those living with mental health conditions and learning difficulties, allowing more people to live independently.’

Andy Rose, chief executive of the HCA, said: ‘Specialised housing is vital in helping older people, and those with disabilities or mental health problems, to benefit from independent living.  It can help people to maintain good health and improve quality of life, while reducing costs in the health sector.’

The fund is open to organisations including housing associations, private developers and local authorities, with bidding closing on 29 May.