The Minister for Housing (Mr Mark Prisk)
The rented sector has become increasingly important in meeting people’s housing needs over the last decade. On 6 September 2012, the Government announced the housing guarantees schemes as part of a package of measures to expand the provision of rented housing and boost economic growth. The Government are setting up two guarantees schemes: one to support the delivery of large-scale professionally managed purpose-built accommodation for private rent and a second to support delivery of additional affordable homes. The Government will guarantee up to £10 billion of housing providers’ debt through the two schemes.
I can announce today that the housing guarantees are open for business. We have awarded the licence to provide the affordable housing guarantees scheme to Affordable Housing Finance plc, a subsidiary of the Housing Finance Corporation Ltd. Their bid provided very good value for money, and I am looking forward to working with them to deliver the scheme. Affordable Housing Finance are now able to receive applications and we expect the first applications to be approved this summer, subject to due diligence.
Today, I have laid before the house a minute setting out details of the contingent liability created by the affordable housing guarantees schemes. Under the affordable housing guarantees scheme, the Department for Communities and Local Government will guarantee up to £3.5 billion of debt on terms of up to 30 years for private registered providers who commit to building new affordable housing.
We are also now able to consider direct applications for the private rented sector guarantees scheme. The response to our invitation to tender for delivery of the scheme indicated a demand from larger investors for individual direct debt guarantees and that Government should take the first steps in developing this new market. We are in conversation with the sector and committed to exploring all of the market-led options, which will lead to guarantees becoming available as soon as possible. We will look to offer direct guarantees on money raised in the bond market by housing providers investing in large-scale and purpose-built private rented sector projects. The Government’s scheme rules for the guarantees are unchanged. Some potential borrowers are already discussing applications with my officials and others are invited to do the same. A formal application process will open shortly.