New MHCLG Fund and Bank aim to unlock housebuilding

NAO report set outs what MHCLG needs to do to deliver success and value for money - including tracking homes built

The National Audit Office (NAO), the UK's independent public spending watchdog, has published its latest report – Unlocking land for housing – examining whether the Ministry of Housing, Communities & Local Government's (MHCLG) programmes to increase the supply of suitable land for housing development are supporting government’s ambitions to help deliver 1.5 million new homes by July 2029.

The government milestone will require building more than 300,000 homes per annum on average, a level of housebuilding that was last achieved in the 1960s.

Since 2016, the MHCLG has allocated £10.5 billion to unlock land for an estimated 713,000 homes.

To be able to demonstrate value for money and be successful, MHCLG will need to swiftly build on the work it has started and set out its long-term ambitions, provide clarity about its investment priorities to the market and decision-makers in local authorities, and to have a clear articulation and management of risk

Through a variety of programmes since 2016-17, that utilise different funding types, including grants, loans and equity investments, MHCLG and its partner agency Homes England have so far committed £8.4 billion of the £10.5 billion allocated funding to projects, of which £5.7 billion has been spent.

Just over 33,000 homes are known to have been built on land unlocked by MHCLG funds, meaning it can only account for 5% of the 713,000 homes it spent billions trying to unlock, suggests the NAO report.

MHCLG did not set out to track the number of homes built on three of its programmes that between them aim to contribute half of the expected 713,000 homes. However, MHCLG is now working with Homes England to track homes built across all its funds.

Launch of the National Housing Delivery Fund (NHDF)

MHCLG now plans to launch the National Housing Delivery Fund (NHDF), from 1 April 2026. The NHDF will comprise grant funding to be delivered by Homes England and other partners, and financial transactions such as loans and investments delivered through a new National Housing Bank (the Bank) created as a subsidiary of Homes England.

MHCLG expects both the NHDF and the Bank will support wider activity beyond the scope of the unlocking land programmes that are the focus of this report.

NAO says: "To be able to demonstrate value for money and be successful, MHCLG will need to swiftly build on the work it has started and set out its long-term ambitions, provide clarity about its investment priorities to the market and decision-makers in local authorities, and to have a clear articulation and management of risk."

What's the problem?

The government says a chronic undersupply of land underpins the housing crisis. It believes there is suitable land in England for housebuilding that is not being developed by the market as it is not profitable or attractive enough for developers to build on in its current form. This can be due to factors such as the need for remediation work, a lack of infrastructure such as roads, or pieces of land making up a site being owned by different people or companies.

The NHDF aims to address these market failures, boost the supply of land for housing development and ultimately increase the supply of housing via several ‘unlocking land’ programmes. These programmes include providing grant funding, recoverable loans, acquiring land and providing capacity support.

For the National Housing Development Fund to be successful and deliver value for money the NAO recommends MHCLG swiftly builds on the work it has started to:

• Set out clear expected impacts, agreeing with its delivery partners performance measurement of site progress and the build?out of unlocked land, using proxy data where needed.

• Establish long-term evaluation and monitoring to generate timely evidence from both legacy programmes and early NHDF activity, improving understanding of what interventions are likely to succeed.

• Clarify funding priorities for the NHDF and engage proactively with the evolving local government landscape, being transparent about which areas are prioritised and what support exists for non-priority places.

• Adopt and share a clear risk appetite and management approach cross MHCLG, Homes England and delivery partners to support consistent, deliberate decision?making across the NHDF portfolio.