Both sectors will receive £3.5bn each to guarantee loans to housing providers to help realise the potential of the growing private rented sector and unlock funding to build thousands of affordable homes to rent.
Deputy Prime Minister Nick Clegg said: “Providing good quality, affordable housing for rent is essential to rebuild our economy after the heart attack it suffered in 2008 which made it harder to buy a first home and put more pressure on the private rental market.
“As well as building more affordable homes the schemes we are launching today will mean more jobs in construction including apprentices giving a much-needed jobs boost across the country.”
The aim of the Private Rented Sector Guarantee scheme is to encourage greater institutional investment in the rental market which the government said is currently dominated by individual landlords rather than organisations.
This means that organisations such as property investors and developers looking to branch out into managing homes specifically for private rent will be able to borrow money to invest at more affordable rates.
The second scheme, the Affordable Housing Guarantee Scheme which will be run by Housing Finance, part of The Housing Finance Corporation, will guarantee up to £3.5bn of debt which will be lent to housing associations to build new homes to rent out to families in need.
This, combined with £450m in government grants, could deliver up to 30,000 new affordable homes to rent in addition to the 170,000 new homes already being delivered by 2015.
Housing minister Mark Prisk said: “The £10bn Housing Guarantees Schemes are now open for business with a groundbreaking new offer of low-cost lending to get spades in the ground, create new jobs and deliver thousands of new homes specifically for rent.
“With the government’s backing investors can now unlock billions of pounds to build high quality homes for private and affordable rent. These changes offer a greater choice for new tenants across the country.”
The full application process with government will open shortly but several large housing providers are already in early discussions about developments that could be eligible for the scheme.
Subject to demand, both these schemes could be boosted by a further £3bn being held in reserve, taking the total amount of government guarantees available to £10bn.
The chief secretary to the Treasury, Danny Alexander, said: “The guarantee programme is the first of its kind and will transform the way housing providers raise money for vital projects. I’m very pleased with the progress we’ve made to ensure that landlords and housing associations across the UK can take advantage of the strength of the UK’s balance sheet and get on with delivering high quality and affordable homes.
“We must keep building on this momentum and I want providers to come forward and seize the unique opportunity that this scheme is offering.”
