Following wide consultation with the housing industry, the government today published details of how the two separate tailored-made guarantees schemes will be structured.
It also issued an invitation to tender for the running of the two schemes, which form the centrepiece of its plans to stimulate house building.
The private rented sector guarantee will back several options to invest in new homes for private rent, from building new homes to converting existing office space.
This will free-up cheap finance for projects that have a minimum value of £10m.
The new homes will have to remain in the private rented sector until the cash is paid back.
Under this new approach, the government will reduce risk for lenders by guaranteeing to repay the money in the event of default from borrowers.
This should enable housing providers to borrow at well below current rates, and therefore encourage more investment in the private rented market.
A separate scheme will support new affordable housing projects, unlocking development for up to 15,000 new homes, on top of the government’s existing house-building programmes.
Housing Minister Mark Prisk said: “We’re introducing groundbreaking measures to unlock the vast, untapped potential for growth in the private rented sector.
“Investors will now be able to draw upon low-cost lending so they can bring thousands of new homes into the market.
“The housing guarantee schemes will help to get spades in the ground, create jobs, and establish new business models that will ensure the private rented sector continues to grow and more affordable homes are delivered.“