The guarantee scheme was set up last year by the government in partnership with commercial money lenders to provide credit for smaller house-builders.
Now the Ministry of Housing, Communities & Local Government has agreed to assume contingent liability for the loans.
The British Business Bank’s Enable Build programme was announced by the chancellor of the exchequer at the 2018 autumn budget and opened to applications from money lenders in May 2019.
Enable Build grew out of the more established Enable Guarantee programme, which takes on a portion of the lender’s risk on loans to small businesses – for a fee.
Housing secretary Robert Jenrick told Parliament yesterday: “Small housebuilders are vital to building the homes this country needs but too often struggle to access affordable finance.
“Today I am giving the green light to a scheme that will help to fix this. Supporting £1bn of new loans so that local builders can kickstart building, level up the country and turbocharge the housing sector.”
British Business Bank managing director Reinald de Monchy said: “The Enable Build programme is a great example of using a cross-government approach to tackle an important, complex issue. Working in partnership with the Ministry of Housing, Communities & Local Government, the Department for Business, Energy & Industrial Strategy and Homes England to address both access to finance and the UK housing shortage, the Enable Build programme will allow us to build on our Enable Guarantee’s success in supporting smaller house-builders that have traditionally struggled to access the funding they need.”
Since the scheme opened for applications in May 2019, the government has received interest from money lenders that want to be involved.
Dave Sheridan, executive chairman of Ilke Homes, which makes houses in factories, welcomed the news. “The announcement of an extra £1bn worth of finance for SME housebuilders is welcome news as, if we’re to tackle the UK’s housing crisis head on, increasing volume and diversity of supply is crucial. Backing SME housebuilders is a good step in the right direction, and will complement the backing of modern methods of construction which is already promising to speed up housing delivery.”