The government has launched a £16 billion National Housing Bank in a bid to break ground on over 500,000 new homes, marking one of the largest state-led housing finance interventions in a generation.
The new lender, announced today by the Treasury and the Department for Levelling Up, Housing and Communities, will be a wholly owned subsidiary of Homes England with powers to issue long-term loans, take equity stakes, and provide guarantees. Ministers say the bank will unlock an estimated £53 billion in private co-investment — though no specific timeline has been set.
The initiative comes as the government attempts to reboot the UK’s stalled housebuilding pipeline and address longstanding structural barriers in development finance. The new bank will focus on under-served parts of the market, with tailored products to support SME builders, complex regeneration sites, and affordable housing schemes.
A £2.5 billion portion of the funding has already been earmarked for low-interest loans to housing associations. The move complements last week’s £39 billion Affordable Homes Programme, announced as part of the Spending Review.
Deputy Prime Minister and Housing Secretary described the move as “the biggest boost to affordable and social housing in a generation”, adding: “We are creating a housing system built on aspiration and opportunity, that meets the needs of the British people.”
The Treasury said the new bank would “partner with industry to bring forward housing schemes, unlocking sites with infrastructure requirements and supporting the scale-up of new approaches to housebuilding.” It forms part of a broader set of government priorities including economic growth, planning reform and delivery capacity.
UK house prices rose 5.4% year-on-year to £268,000 in February, while average private rents hit £1,332 a month in March — a 7.7% annual increase. Construction output rose 0.9% in April, marking a third consecutive monthly gain. The Bank of England cut interest rates by 25 basis points in May to 4.25%, the first move since 2023.
Despite today’s announcement, housebuilder shares showed only mild movements. Barratt Redrow closed down 1.57% at 462.5p, while Taylor Wimpey ended 0.62% lower at 120.35p.
The National Housing Bank is expected to begin operations within the current financial year. The government will publish a wider 10-year Infrastructure Strategy this week to outline the longer-term capital investment framework.
