The Builders Finance Fund, recently announced by Housing Minister Kris Hopkins, will help build a total of 15,000 homes nationwide.
Each new residential property will also support 15,000 jobs in the construction industry and sustain hundreds of businesses that supply building materials to developers.
All of the £525 million fund has been earmarked for ‘shovel-ready’ sites, housing between 15 and 250 homes, which already have their plans in place and the backing of people in the local area but need a bit of help to get development moving.
The government wants smaller housing schemes to play a bigger role in boosting the supply of new homes.
Mr Hopkins claims the collapse of the unsustainable housing boom in 2008 had devastated the construction industry, leading to the loss of 250,000 jobs and a falling market share for smaller builders.
But the sector is now beginning to enjoy a revival, and the Builders Finance Fund is one way of ensuring the recovery sticks.
All developers can apply for a slice of the cash, although the focus on smaller schemes will benefit smaller companies who sometimes struggle financially when it comes to getting projects off the ground.
Funding will be awarded on the basis that it will be repaid, with the cash being released over two years from 2015 to 2016 through to 2016 to 2017.
Simon Kibblewhite, National Head of Development and Planning at Strutt & Parker, comments: “This new fund is a good idea as smaller builders and developers haven’t been able to contribute much to housing growth in the last few years due to lack of credit.
"If we are going to get anywhere need the Government’s target 200,000 new homes a year, there will need to be a huge increase in the number built by SMEs, bearing in mind the top three major housebuilders currently produce around 35,000 per year between them.”
Support through the Builders Finance Fund will be on top of £1 billion that has been made available to unlock 250,000 homes on large-scale developments with over 1,500 units.
A £50 million Local Growth Fund is also being targeted at kick-starting stalled housing projects of between 250 and 1,499 homes.
Bidding for the Builders Finance Fund will begin on May 14. Both of the other schemes are currently open for the bids.
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