The government has offered up to £10 billion in loan guarantees to get Britain building and deliver tens of thousands of homes to rent.
Ministers said these innovative new guarantees will not only help realise the potential of the growing private rental market but unlock funding to build thousands of affordable homes to rent.
Through these groundbreaking new schemes, the government will offer up to £10 billion worth of guarantees on loans to housing providers - enabling them to borrow money to invest in new housebuilding on more favourable terms.
The first of these will be the Affordable Housing Guarantee Scheme, which will be run by Affordable Housing Finance, part of The Housing Finance Corporation. Through the scheme, the government will guarantee up to £3.5 billion of debt for Affordable Housing Finance, which will be lent to housing associations to build new homes to rent out to families in need
This, combined with £450 million in government grants, could deliver up to 30,000 new affordable homes to rent - in addition to the 170,000 new homes already being delivered by 2015.
The second will be a £3.5 billion Private Rented Sector Guarantee scheme. This market is currently dominated by individual landlords rather than organisations, so to encourage greater institutional investment the government will offer direct guarantees to housing providers.
This means that organisations such as property investors and developers looking to branch out into managing homes specifically for private rent will be able to borrow money to invest at more affordable rates.
The full application process with government will open shortly but several large housing providers are already in early discussions about developments that could be eligible for the scheme. Ministers welcome any other interested parties to come forward to discuss their plans.
Subject to demand, both these schemes could be boosted by a further £3 billion being held in reserve - taking the total amount of government guarantees available to £10 billion.
Housing Minister Mark Prisk said: "The £10 billion Housing Guarantees Schemes are now open for business, with a groundbreaking new offer of low-cost lending to get spades in the ground, create new jobs and deliver thousands of new homes specifically for rent.
"With the government’s backing, investors can now unlock billions of pounds to build high quality homes for private and affordable rent. These changes offer a greater choice for new tenants across the country."
Deputy Prime Minister Nick Clegg said: "Providing good quality, affordable housing for rent is essential to rebuild our economy after the heart attack it suffered in 2008, which made it harder to buy a first home and put more pressure on the private rental market.
"As well as building more affordable homes, the schemes we are launching today will mean more jobs in construction including apprentices - giving a much-needed jobs boost across the country."
Chief Secretary to the Treasury, Danny Alexander said: "The guarantee programme is the first of its kind and will transform the way housing providers raise money for vital projects. I’m very pleased with the progress we’ve made to ensure that landlords and housing associations across the UK can take advantage of the strength of the UK’s balance sheet, and get on with delivering high quality and affordable homes.
"We must keep building on this momentum and I want providers to come forward and seize the unique opportunity that this scheme is offering."
Piers Williamson, Chief Executive of The Housing Finance Corporation said: "The Housing Finance Corporation is delighted to be working with the Government to ensure the success of this innovative construct. As the most frequent issuer of Capital Markets debt for Housing Associations and through our 12 year record of working with the European Investment Bank, we have built up a great record for delivering cost effective and timely long term funding for Housing Associations. We look forward to reinforcing the government’s determination to promote incremental housing output."
