Builders Finance Fund – £525m of government funding for Residential Schemes
The 2014 budget included several announcements aimed at encouraging the building of new homes in England. One of these, the Builders Finance Fund, took a step closer to being delivered on 14 May 2014. From this date companies were able to complete an “Expression of Interest Form”, the first step in the chain to obtain finance from the Fund.
What is the Government trying to achieve with the fund?
The objective stated in the prospectus is to help accelerate and unlock developments for between 15 and 250 units in England being undertaken by a private developer that have slowed, or stalled, due to difficulties accessing development finance. The prospectus refers to unlocking viable, deliverable projects which can start or re-start soon and achieve good value for money for the tax payer.
Not surprisingly funding is only being made available on the basis that it is fully recoverable! However the Fund will make direct investment in specific projects through loans or by taking an equity stake, an unusual approach for the government.
A brief summary of the key conditions is given below:
- Schemes must be for between 15 and 250 new housing units, but may include elements of non-housing development where this is integral to the overall project.
- Bids have to be submitted by private sector bidders, who control the site which require funding.
- A single bidder can put forward bids for different sites.
- The site must have at least outline planning consent at time of the submission of the Expression of Interest.
- The site must have an implementable planning consent in place by 31 March 2015 to enable development to commence.
- Schemes must be in a position to draw down funding in full prior to 31 March 2017, and must include some draw down of funds in 2015/16. Repayment profiles will, however, be agreed on a case by case basis.
- A minimum investment of £500,000 is required, there is no upper limit. It is anticipated that the total public funding will comprise a maximum of 50% of project costs.
- Bidders must confirm the project is fundamentally viable, that they can support the repayment and have the consent of any existing lenders to access additional finance from the Fund.
- Properties finances through the Fund must be marketed in the UK.
Bidding was launched on 14 May 2014, and expressions of interest must be submitted by 25 June 2014. Applicants will be contacted before the end of September 2014 if they have been shortlisted for the next stage – Due Diligence.
Full details of how to submit an application with supporting guidance is available here.
Expressions of interest have to be submitted via the Partner Portal here.
If you do apply please let your contact in the Kingston Smith Property Team know how you get on.