The two guarantee schemes will use the government's fiscal credibility to provide property investors with low-cost finance so they can deliver new private rented or affordable housing.
Danny Alexander, chief secretary to the Treasury, said: "The announcement today shows we're getting on with delivering an ambitious guarantee programme, giving projects across the UK a unique opportunity to take advantage of the strength of the UK's balance sheet, allowing businesses and homeowners to benefit from lower borrowing costs and more affordable housing.”
The guarantees were initially announced in September 2012 with the government hoping to kick-start private investment in the housing sector, creating thousands of new homes and jobs and boosting growth across the country.
The schemes support new-build projects. The scheme for private rented housing will back a variety of options to invest in new homes for private rent, from building new homes to converting existing commercial spaces into rental properties - as long as the project has a minimum value of £10m. The scheme for affordable housing will unlock development of up to 15,000 new homes, according to the government, on top of its existing house-building programmes.
The schemes will see the government will reduce risk for lenders by guaranteeing to repay the money in the event of default.
Mark Prisk, housing minister, said: "We're introducing groundbreaking measures to unlock the vast, untapped potential for growth in the private rented sector. Investors will now be able to draw upon low-cost lending so they can bring thousands of new homes into the market.
"The housing guarantee schemes will help to get spades in the ground, create jobs, and establish new business models that will ensure the private rented sector continues to grow and more affordable homes are delivered."
