The fund, part of £5bn boost unveiled at Tory conference, aims to provide 15,000 new homes on public land by 2020

A £2bn fund to boost housebuilding could be used by the government to offer guarantees to developers that it will step in to take on properties that they are unable to sell.

The Conservative party unveiled plans on Monday for £5bn worth of funding to support housebuilding, £2bn of which was designed to provide 15,000 new homes on public land by 2020.

The accelerated construction fund, could be used to underwrite new developments on public land, and could mean the government taking on unsold properties, according to Sir Edward Lister, the chairman of the Homes and Communities Agency (HCA), which will oversee it.

In an interview with Property Week, Lister said: “The way I see that going is guarantee money rather than anything else.

“So it’s about us going to a housebuilder and instead of expecting the normal build-out rate of 50 units a year we’ll say, ‘We want you to build all 500 in one go and what we’ll do is guarantee to take them off you if you can’t find a buyer.’”

Property Week reported that the HCA would sell the homes on the open market or to private or social landlords, and that prices would be set before the government chose which schemes to back.

Steve Turner, a spokesman for the Home Builders Federation, said the guarantee was part of a package of measures which should help small firms come back to the market. “The reason that you’ve seen the number of small builders fall by 80% in the past 25 years is that building has become a very risky business. Any way you can derisk that process will help,” he said.

Turner said that under the plan, builders would enter into a contract with the HCA at the start of the building process. “This doesn’t mean that they are guaranteeing homes in places where there is no demand for them – there will be a very detailed contract ensuring that it is the right properties being built in the right market.”

He said he expected small firms and new entrants to the market to be the biggest beneficiaries of the fund, which is also expected to offer land on a “buy now, pay later” basis and with planning permission already granted.

An HCA spokesperson said: “The HCA is exploring a number of ways that result in faster build-out rates. One of these is to share the exposure with the contractor in the rare circumstance that homes are not sold.”



In the 1980s, around two-thirds of new homes were built by small firms, but their contribution has now dropped to about a quarter. Recently the Federation of Master Builders (FMB) said that a lack of available and viable land was the biggest barrier to building for SMEs in the industry, while difficulty accessing finance was another key issue.



The remaining £3bn of the government’s £5bn investment pledge will go towards a housebuilding fund, which will also be administered by the HCA.

It will provide £1bn of loan funding to small builders and others creating small numbers of homes, as well as long-term funding for infrastructure which the government said would “unlock a pipeline of up to 200,000 homes over the longer term”.

