On Thursday, 20 March, Housing Minister Matt Pennycook took to the stage at Homes England’s agency-wide Town Hall meeting to address the vital role the agency is playing and to recognise their achievements and ambitions in the housing sector. One of the points of note was their continued collaborative work across our industry, which leads us nicely into this week's blog. One of our proudest achievements is seeing the net results of our collaborated efforts to continue to fund and bolster SME developers in the residential housing space and the real-life differences our partnership can make, so this week, we explore some of the details as to how our relationship works, and why it's so important.
The UK housing market faces an ongoing challenge: delivering enough homes to meet demand while ensuring that small and medium-sized developers (SMEs) access the necessary funding. This is where the partnership between Homes England and Invest & Fund steps in. Our recently expanded Lending Alliance is a critical step forward in supporting SME housebuilders, ensuring they can continue to build much-needed homes across the country.
Homes England, the government's housing and regeneration agency, has long recognised SME developers' crucial role in the industry. These smaller builders bring diversity, flexibility, and local expertise, helping to create vibrant communities. However, as we know, they often struggle to secure funding from traditional financial institutions, limiting their ability to take on new projects. To address this challenge, our shared goal is simple but impactful: to increase the availability of finance to SME developers and enable them to build more homes faster.
So, what's new?
Our original collaboration established a £25 million revolving fund, providing construction loans of up to £2.5 million to small housebuilders. The newly refinanced agreement significantly enhances this support by:
Increasing the fund from £25 million to £47.5 million
Raising the loan cap to £4 million
Extending the Fund's term to March 2030
Offering a maximum 70% Loan-to-Gross Development Value and 85% Loan-to-Cost
SME housebuilders bring competition and innovation to the market, helping to break the dominance of large developers. However, one of their biggest obstacles remains access to affordable finance; by expanding this lending program, Homes England and Invest & Fund address that barrier head-on. With more flexible, accessible funding, smaller developers can confidently take on projects, accelerating housing delivery and meeting the government's ambitious target of building 1.5 million new homes over the next five years.
Moreover, this financial backing is not just about building homes—it's about supporting local economies. SME developers often employ local workers, source materials regionally, and contribute to community growth. This creates a ripple effect, fostering job creation and stimulating business activity in smaller towns and cities across the UK. This initiative also aligns with broader government efforts to support SME developers. It follows the recent £700 million extension of the Home Building Fund, which aims to help SMEs construct up to 12,000 additional homes. These measures reinforce the government's commitment to diversifying the housing market and ensuring that small builders have the necessary resources to thrive.
Homes England's Chief Investment Officer, Marcus Ralling, emphasised the importance of small developers, stating:
"Small and medium housebuilders play a vital and essential role in driving the delivery of new homes where they are needed most. This refinancing demonstrates our ongoing commitment to supporting the small builders that are crucial to building a diverse and resilient housing sector."
Robert Burgess, Chairman at Invest & Fund, echoed this sentiment:
"Invest & Fund are delighted to be working with Homes England to support SME developers and ensure that they have access to vital funding to deliver much-needed new homes across the country."
By nearly doubling the available funds and extending its term, this initiative will provide sustained, long-term support to small developers, helping them grow, build more homes, and contribute to a more diverse and resilient housing sector. As the UK works toward its ambitious housing targets, partnerships like this are essential. With continued investment and support, SME developers will play a pivotal role in shaping the future of housing, ensuring communities nationwide have access to quality, affordable homes.
Ultimately, this initiative's ongoing success will be measured in the number of homes built and its lasting impact on the SME sector. By fostering a more competitive, innovative, and inclusive housing market, Homes England and Invest & Fund are laying the foundation for a stronger, more sustainable future in UK housing.
Invest & Fund has returned over £300 million of capital and interest to lenders with zero losses, showing the rigour that governs our business.
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