Homes England mulls 25-year term for National Housing Bank’s low-interest loans to registered providers

Speaking earlier in the day at the conference, Simon Century, Homes England’s chief investment officer, told delegates that as a public finance institution, like the National Wealth Fund and the British Business Bank, the National Housing Bank would require a rate of return that essentially pays the government back. 

That number is yet to be decided, Mr Century said, “but broadly around the gilt level, and we’ll work out how we measure that through time”. Mr Century took up the role in September to lead on the establishment of the new bank. 

Mr Century also indicated what the split between debt and equity might look like at the bank. The government has previously announced that £5.5bn would be for contingent liabilities (ie guarantees), while £10.5bn would be investment capital comprising both debt and equity. Mr Century told delegates that the bank’s £16bn “firepower” would be divided “roughly a third: a third: a third” between equity, debt and guarantees.

House builder growth

On the debt side, Mr Barclay’s team currently works across four key areas – development finance for SME builders, structured real estate loans, lending alliances and infrastructure lending – with a focus on “trying to get house builders to grow”. Interventions are designed to support the market to deliver more homes, where other lending products are not currently available.

Mr Barclay said that as this work evolves and scales within the National Housing Bank, discussions are underway around how it could design “counter-cyclical” products that can provide support in a struggling market. 

“We’re thinking about, for the new fund, [how] we want to have some counter-cyclical products that we’ve never had before. If you look at delivery from my team over the last six years, you can see a clear ‘W’ shape [that] goes up and down in terms of what’s happening in the wider market. And as an interventionist lender, which is a mission that we’ve got, we should have products that we can ‘play in’ when the market’s struggling a wee bit, to encourage [delivery].”

He added: “If we’re in a point in the market where it’s really sluggish, how great would it be if I could say to a small house builder, ‘If you take an educated gamble, start your project now, if you complete those homes in 18 months and you’re not selling them, I’ll switch you to interest-free for six months so you’ve got no hold costs.’

“Now that would be a subsidised product, and we’d have to fund that from the wider return to the bank, but it’s that kind of counter-cyclical product that we need to make ourselves, different from what everyone else is doing. So that’s the kind of direction of travel that we’re in.”

Mr Barclay added that the product could take the form of a “lending alliance” or more direct lending from Homes England. 

Risk and profit share

Other products under consideration include land loans, low-interest-rate loans for SMEs, and revolving credit facilities to enable house builders to scale by unlocking additional sites (rather than having financial capacity tied up in one until home sales complete).

Mr Barclay also referred to the potential for the agency to support delivery through risk-sharing, within infrastructure for example. He cited an example of an infrastructure loan over a 10 to 15-year period, where the cost of the compound interest might approach the total value of the loan. 

“There was one that we looked at six months ago where the loan was about £50m, and the interest costs over that period of time were about £45m.” 

He added: “It’s just that compounding of interest that really adds significant risk to that project. So we’re starting to think about: could we convert some of our interest and perhaps profit-share to de-risk it?

“We need to make sure we stay honest in terms of subsidy-control diligence, so that profit share has to be appropriate for the risk that we’re taking. But if you think of that interest cost essentially as a fixed overhead in that project, if we can take some of that risk share alongside the developer, then that could help.”

More broadly, Mr Barclay said that the division aimed to get its commitments up to around £900m of capital on the lending side this year, up from £725m last year.

“The [work in progress (WIP)] for us at the moment is really strong. We’ve got about £1.8bn of WIP, but like most lenders, we’re finding it challenging to get those deals across the line because there’s clear nervousness in the market.”

The Housing Delivery and Investment Symposium took place on 24 November in London as part of Housing Week London 2025. Other events include the Social Housing Leaders Conference on 26 November, where you can hear from Shahi Islam, director of affordable housing at Homes England.