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UK creates £3 billion fund for small firms to build homes

Staff Writer |
The Chancellor, Philip Hammond, and Communities Secretary, Sajid Javid, have announced new measures to build more houses in the form of the Home Building Fund (HBF).

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Under the plans, the Government has agreed a £3 billion investment to help small independent family firms to build 25,000 new homes by 2020 - and up to 225,000 in the longer term.

Finance can be a barrier in home building, particularly for small builders and innovative schemes. So as well as helping larger builders and developers, the Home Building Fund is also open to small builders, community builders, custom builders and regeneration specialists.

Finance is available to all private sector organisations involved in delivering new homes and the provision of enabled sites ready for residential led schemes.

The Fund has a few core eligibility criteria:

- applicants will need to demonstrate that without this funding the scheme would not progress as quickly, or at all
- developments must be in England
- the borrower must be a private sector entity which has majority control of the site
- development projects must build a minimum of 5 homes
- the borrower must be a UK registered corporate entity
- infrastructure projects must ultimately lead to the development of new housing
- the minimum investment the Fund will make is £250,000, except in the case of innovative housing solutions and serviced plots for custom builders.

At the point at which a loan offer is made, applicants are normally required to have a controlling interest in the land and a clear route to achieving planning consent.

The key features of the Fund are:

- loans of £250,000 to £250 million are available with smaller loans considered for innovative housing solutions and serviced plots for custom builders
- typical terms are up to 5 years for development finance, and up to 20 years for infrastructure loans
- interest is payable at transparent, pre-agreed variable rates
- sales income can be recycled to minimise the loan request
- subordinated lending will be considered
- finance is available to draw down up to March 31, 2021
- eligible costs will be discussed with each applicant and depend on the type of funding requested.

The HCA has responsibility for managing the Fund and its lending decisions are final.

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