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NatWest launches £500 million loan offering to build social rent housing in first to market move

The new social loan aims to support housing associations, which are already NatWest customers, to build social rent houses across the UK. The new loan has no arrangement fee and discounted interest margins

NatWest, the largest business bank in Great Britain, is today launching new lending of up to £500 million entirely ringfenced for the building of social rent housing across the UK. This is a first of its kind offering to the market that shows the bank’s commitment to supporting the sector. The loans will be made available to eligible housing associations, which are existing customers of the bank, and is in response to customer feedback asking for more funding to be made available for this purpose.  The social loans will be incentivised with discounted interest margins and no arrangement fee. NatWest anticipates that the discount in fees and margin on the £500 million when fully deployed could save the housing association sector up to £25 million of finance costs that could be used to invest in new social rent homes.

According to Government data, over 1.3 million households are on social housing waiting lists and 145,000 children live without the security of a stable home.¹ The National Housing Federation is calling for 90,000 social homes to be built each year in England, over the next 10 years to address the housing crisis.² NatWest is committed to helping and has a £7.5 billion lending ambition to the social housing sector by the end of 2026. This includes a partnership with the National Wealth Fund with NatWest agreeing to loan up to £500 million to help with lending to retrofit existing social homes, supported by a guarantee from the National Wealth Fund. The new ringfenced £500 million lending for building social rent housing is the latest step in the bank’s support.

The number of social housing properties across the UK has declined over the years due to restricted financial capacity, stemming from lower public funding for home development, rising costs, limited rent increases, and increased commitments to remediate existing stock to meet building safety and environmental standards.³ Consequently, housing associations have increasingly focused on developing alternative tenures to ensure the financial viability of new home construction and the maintenance of existing properties. In England, housing associations have expanded their affordable rent development programmes, as these generate rents of up to 80% of market rates, in contrast to social rent, which typically yield rents of approximately 50% of market rates. It is hoped that the provision of discounted loans for building social rent homes will support their construction and enable housing associations to allocate funds towards improving living conditions within the communities they serve.

According to a 2024 report from Shelter and the National Housing Federation, social homes are more stable than private renting, as tenancies are secure, leading to better socioeconomic outcomes and increasing rates of employment.

 

Paul Thwaite, CEO at NatWest Group, said:

“We’re proud to be a major lender to the UK social housing sector and are committed to the role we can play in supporting house building. The housing crisis is one of the biggest issues facing our country which is why we have made a £7.5 billion lending ambition to the social housing sector.  As part of this, our first of its kind £500 million social loan offering is the latest support for our customers to help social rent house building across the UK.

With over 1.3 million people on social housing waiting lists, this is a step in the right direction to help those who need it most.”

“This announcement comes soon after the news of NatWest Group agreeing a guarantee from the National Wealth Fund of up to £400 million to help with lending to retrofit existing social homes. We look forward to continuing to work with providers from across the industry to support house building and to help more people into safe stable homes.”

 

Liz Laurence, Programme Director for The Royal Foundation’s Homewards programme, said:

“It is great to see NatWest’s announcement today to deliver new support for more social home building. As a Homewards Activator, NatWest has been doing some great work, so we are excited to build on this and go even further through our work together.

“Homelessness is a societal issue that requires a collective response, and we hope more organisations will be inspired to play their part as a result of NatWest’s significant commitment today.” 

Notes for Editors

Loans will be documented in line with LMA Social Loan Principles

The social loan will be available to housing associations which are existing customers of NatWest Group and meet the applicable eligibility criteria

 

Terminology and Context:

Social rent is approximately 50% of local market rent. Affordable rent is up to 80% of local market rent. Source:  Affordable housing in England

In 2024, in England, according to the Regulator of Social Housing, there was a net increase of 700 social rented properties compared to 24,800 affordable rented properties. Source: Social landlords continue to build new homes, according to RSH statistics - GOV.UK

¹Sources: Social housing lettings in England, tenants: April 2023 to March 2024 - GOV.UK and Youth Homelessness - Hansard - UK Parliament

²Source: National Housing Federation - Let’s fix the housing crisis

³Source: Affordable housing in England

 

About Homewards

Homewards is a five-year programme from The Royal Foundation that aims to demonstrate that it is possible to end homelessness, making it rare, brief and unrepeated. With a focus on prevention, Homewards brings together local coalitions, national partners and businesses that tackle homelessness. The programme operates in six flagship locations across the UK: Aberdeen, Bournemouth, Christchurch and Poole, Lambeth, Newport, Northern Ireland, and Sheffield.

NatWest Group is proud to support Homewards as an Activator, working closely with the programme to explore how the bank’s expertise and resources can contribute to preventing homelessness. NatWest will also work alongside Homewards to actively engage the flagship locations in this offer and to explore further solutions to help unlock more housing and prevent homelessness.

 

About NatWest

NatWest Group serves customers in the UK supporting them with their personal, private, and business banking needs. NatWest helps customers at all stages in their lives, from opening student accounts, to buying their first home, setting up a business, and saving for retirement. Alongside a wide range of banking services, NatWest offers businesses specialist sector knowledge in areas such as manufacturing and technology, as well as access to specialist entrepreneurial support.

The information contained in our press releases is intended solely for journalists and media and should not be used by consumers to make financial decisions. Terms and conditions apply to any products or services mentioned in our press releases.

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