The updated Lending Alliance will now offer development loans of up to £4 million—an increase from the previous limit of £2.5 million
Small and medium-sized enterprise (SME) developers are set to receive a substantial boost in their capacity to deliver housing projects, thanks to an expanded partnership between Homes England and the development finance platform, Invest & Fund. This strengthened collaboration is a key component of the government’s ambitious plan to deliver 1.5 million new homes over the next five years.
The updated Lending Alliance will now offer development loans of up to £4 million—an increase from the previous limit of £2.5 million. Loans will be capped at 70% Loan to Gross Development Value (GDV) and 85% Loan-to-Cost. The expansion is expected to enable the construction of an additional 600 homes, adding to the 107 homes already built under the initial phase of the partnership.
The roots of the partnership date back to 2020, when Homes England and Invest & Fund joined forces to create a £25 million revolving fund aimed at addressing the financial challenges faced by SME developers. This fund was specifically designed to support smaller-scale housing developments, funding projects starting with just two homes and providing up to 80% Loan-to-Cost. The initial alliance played a vital role in enabling smaller housebuilders to thrive during a period of economic uncertainty.
Enhanced Support for SME Developers
Building on this success, the newly refinanced agreement will nearly double the available funds, increasing the total to £47.5 million, and extend the fund’s duration to March 2030. A significant portion of the funding will be dedicated to supporting micro-SMEs—builders and developers that often operate on the smallest scales but play a vital role in diversifying the housing sector and delivering homes in local communities.
This expansion also aligns with other government initiatives, including the £700 million extension to the Home Building Fund announced in December 2024. That measure aims to support the delivery of up to 12,000 new homes by providing financing to SME developers, further underscoring the government’s commitment to addressing the UK’s housing shortage.
A Diverse and Resilient Housing Sector
Marcus Ralling, Chief Investments Officer at Homes England, highlighted the importance of SME developers in achieving the government’s housing goals. “Small and medium housebuilders play a vital and essential role in driving the delivery of new homes where they are needed most,” he said. “This refinancing demonstrates our ongoing commitment to supporting the small builders that are crucial to building a diverse and resilient housing sector. By nearly doubling the fund and extending its availability, we’re providing sustained, long-term support to help SME developers grow and deliver more homes at pace.”
The emphasis on supporting SME developers is part of a broader strategy to create a more robust housing ecosystem. Smaller housebuilders often have the flexibility to focus on smaller parcels of land, bringing much-needed housing to areas where larger developers may not operate. Their role is particularly critical in areas facing acute housing shortages, where the delivery of new homes can have an immediate impact on local communities.
Empowering Local Communities
In addition to addressing housing shortages, the expanded fund is expected to have a positive impact on local economies. By empowering SME developers, the partnership is likely to generate new employment opportunities in construction and related industries, creating a ripple effect that extends beyond the housing market.
Robert Burgess, Chairman of Invest & Fund, expressed optimism about the enhanced collaboration. “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,” he said.
Burgess emphasized that access to finance remains one of the biggest barriers for SME developers, particularly in a challenging economic environment. “By providing this level of support, we’re helping to ensure that these builders can continue to play their crucial role in delivering high-quality housing and meeting the needs of communities across the UK,” he added.
A Long-Term Commitment
The strengthened partnership is part of Homes England’s long-term vision to support a vibrant, sustainable housing market. By focusing on the needs of SME developers, the agency aims to ensure that the housing market remains resilient, adaptable, and capable of meeting the diverse needs of the population.
The expansion of the Lending Alliance not only reaffirms the government’s commitment to tackling the housing crisis but also underscores the critical role that smaller developers play in achieving this goal. With increased funding and a longer timeline for support, SME developers are better positioned than ever to contribute to the delivery of high-quality homes across the UK.
As the UK faces mounting pressure to address its housing shortage, the collaboration between Homes England and Invest & Fund offers a promising blueprint for how public and private sector partnerships can drive meaningful progress in one of the country’s most pressing issues.
