British Business Bank ENABLE Guarantee with Hampshire Trust Bank

There is consensus regarding the long-term under-supply of housing and the need to address this, but there is less agreement within the industry about how best to achieve the necessary change in supply.

The current Conservative Government was elected in 2017 with a manifesto pledge to meet the 2015 commitment to deliver 1 million homes by the end of 2020 and to

deliver half a million more by the end of 2022.

Last month, the House of Commons released a briefing paper which stated that according to current projections, an average of 210,000 new households will form in England in each year between 2014 and 2039. In 2016/17, the total housing stock in England increased by approximately 217,000, which was 15% higher than the previous year’s increase but short of the estimated 240-250,000 new homes needed to keep pace with household formation.

At Hampshire Trust Bank (HTB), we are aware of our role in helping to improve the housing crisis. Today, we are pleased to announce the launch of an ENABLE Guarantee with the government-owned British Business Bank (BBB), specifically designed to boost the UK SME housebuilding sector. The guarantee encourages banks to increase their lending to SMEs by reducing the amount of capital required to be held against such lending. This initiative allows the UK Government to take on a portion of the counterparty’s risk on a portfolio of loans to smaller businesses in return for a fee.

This partnership has been forged to address the issue of high capital requirements associated with small business finance, which restricts banks’ ability to lend to SMEs. The transaction will enable HTB and the BBB to support the building of new housing to value over £500m over the lifetime of the guarantee, which is a significant increase in the amount of housing built by SMEs that HTB can finance alone.

Commenting on the guarantee, Business Secretary Greg Clark said:

The UK’s 5.7 million small businesses are the backbone of our economy. Through our modern Industrial Strategy and the Construction Sector Deal, the British Business Bank is supporting small businesses in the housebuilding sector to access the finance they need to maximise their potential, grow and boost the number of homes built.

This initiative demonstrates our commitment to the property development sector by helping SME housebuilders make the most of the opportunities available to them. Our development finance division are dedicated to delivering creative and customised financing solutions to experienced property professionals across the UK, all centred on a traditional relationship-based approach to banking. More here.

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