The government has set out details of who can bid for two house building guarantee schemes that will support a total of £10 billion of lending.
The Communities and Local Government department has published eligibility requirements and information about how the schemes to support private rented sector homes and affordable housing will be structured.
The private rented sector guarantee will support various ways to develop homes, from building new properties to converting offices for residential use.The fund will make finance available for projects in any part of the UK that have a minimum value of £10 million. The new homes will have to remain in the private rented sector until the money is paid back.To qualify, the homes must not yet have started on site, be well-designed and commercially viable with a plan for rental management, and meet the scheme’s stated criteria. If the application is successful and the scheme goes ahead as planned, the government will guarantee the debt until it is repaid.
The affordable housing guarantee will work in a similar way, and is designed to support the development of 15,000 homes on top of existing affordable housing commitments.
Both schemes reduce risk for lenders by guaranteeing to repay the money in the event of a default from borrowers, allowing housing providers to borrow at favourable rates. The £10 billion of guarantees were first announced in September 2012, but with few details about how the schemes would work.
The department has also now published an invitation to tender for the running of the schemes.