In spring of this year, the Ministry of Housing, Communities and Local Government announced that £2.5bn of long-term, low-cost loans will be made available to private registered providers of social housing (RPs) to support the delivery of more social and affordable homes. The loans form part of what the Government has described as the ‘biggest boost to grant funding in a generation.’
The loans will be available on a 25 -year term, with a fixed interest rate of 0.1%, and will be repayable at maturity in a single bullet. The loans will be unsecured and subordinated to third-party debt, allowing them to sit alongside senior borrowing within an RP’s capital structure. Of the £2.5 billion allocation, £1 billion will be administered by the National Housing Bank (operating within Homes England) and the remaining £1.5 billion will be administered by the Greater London Authority (GLA) in London. Up to 10% of the total funding may be set aside for the acquisition of Section 106 affordable homes from developers. Both not-for-profit and for-profit RPs are eligible to apply. Funding will be available to draw down over a four-year period (2026 to 2029)
The loans are available through a competitive bidding process closely aligned with the Social and Affordable Homes Programme (SAHP) 2026 to 2036. Bidding for the SAHP opened in February 2026, with the strategic partnership funding route losing on 15 April 2026, continuous market engagement (CME) applications can be submitted throughout the programme on an ongoing basis. As part of the SAHP application process, RPs are asked to indicate whether they wish to bid for low-interest loan funding.
Successful applicants are required to demonstrate deliverability, value for money and, critically, that the loan will enable the delivery of significantly more homes than could be achieved using grant and conventional borrowing alone. The Government has confirmed that minimum and maximum loan sizes will apply per organisation, though specific thresholds have not yet been published.
The National Housing Bank launched on 1 April 2026 and is now fully operational. It operates as a subsidiary of Homes England and functions as a broader financing platform for housing and regeneration. The Bank launched with seven core debt products and, in addition to providing the low-cost loans for social and affordable housing, it will deploy a wider range of financial products including debt, equity investment and government-backed guarantees to facilitate both direct and indirect investment into housing delivery. This broader toolkit is intended to unlock private capital, support the development of large or complex sites that may struggle to secure early-stage funding, and expand access to finance for housebuilders, including SMEs. The Bank is also expected to work with mayoral authorities and other local partners to develop integrated packages of support combining finance, land and grant funding to accelerate housing and regeneration projects.
Within that wider framework, the 0.1% loan product represents a targeted intervention aimed specifically at supporting registered providers to deliver additional social and affordable homes.
Of the £2.5bn allocation, 60% (£1.5bn) is expected to be directed to London. Up to 10% of the total funding may be set aside for the acquisition of section 106 homes. The Government has also confirmed that both not-for-profit and for-profit RPs will be eligible to apply.
The loans are intended to operate alongside SAHP grant funding and support the same social and affordable tenures and strategic priorities. As part of their SAHP application process, RPs will therefore be asked to indicate whether they wish to bid for low-interest loan funding. Further detail is awaited on minimum and maximum loan amounts, additional bidding rounds or whether continuous market engagement opportunities will be available beyond the initial allocation period.
Given their subordinated structure and long-dated maturity, the loans are expected to function as an alternative form of patient capital within an RP’s capital stack. The low interest rate may also enable RPs to overcome the hurdle of interest cover covenants that have limited their investment capacity. These factors combined may improve scheme viability and enable providers to deliver additional homes alongside grant and senior debt.
The Government has confirmed that the introduction of the low-interest loan scheme will require completion of the competition and Markets Authority (CMA) subsidy control process. This was identified as a key procedural step in the January 2026 Written Ministerial Statement and in the SAHP policy statement, and providers should factor this into their planning timelines.
Its investment strategy is set out in the Homes England and National Housing Bank Investment Prospectus 2026, published alongside the Bank’s launch.
Sarah Whitty, Banking and Finance Partner at Winckworth Sherwood, said:
“The loan scheme represents a significant shift in how affordable housing delivery may be financed. Ultra-low cost, long-term subordinated funding has the potential to act as a powerful catalyst alongside grant and conventional borrowing, particularly for providers looking to scale delivery through partnerships and platform structures. Now that the National Housing Bank is operational and the SAHP bidding process is underway, providers should be actively considering whether this product can unlock schemes that might otherwise struggle to stack up financially.”