The UK Government has announced the extension of the Home Building Fund, allocating up to £700m ($883m) to assist small and medium-sized housebuilders.

This move is aimed at stimulating economic growth and facilitating the construction of tens of thousands of new homes.

Initially set to close to new business on 31 March 2025, the Home Building Fund will continue to provide vital financial support to England-based housebuilders facing difficulties in securing finance from traditional lenders. The extension ensures ongoing funding beyond the initial deadline.

The fund will increase the cash available for smaller housebuilders through direct loans and lending partnerships, contributing to the government's Plan for Change.

This plan aims to construct 1.5 million new homes over the next five years, enabling more families to own homes and creating jobs in regions that need them most.

The extension of the fund is expected to support the creation of approximately 12,000 additional homes, adding to the 42,000 homes already projected to be delivered.

This initiative addresses the persistent issue of credit access for housebuilders, which has been a significant hurdle in sector growth.

Kingswood Homes in Lancashire and the Bristol-based PG Group are among the previous beneficiaries of the fund, with the former more than doubling their annual housebuilding targets and the latter tripling the number of affordable homes on a brownfield site.

Furthermore, the fund plays a role in attracting investment from pension funds and institutional investors. A notable example is the recent £25m deal with Muse Places and Pension Insurance Corporation, which aims to deliver 3,000 energy-efficient and affordable homes.

This announcement comes on the heels of an additional £3bn government support package for SMEs and the Build-To-Rent sector, unveiled during the Budget. This support is projected to yield over 20,000 more homes through the expansion of housing guarantee schemes.

Lastly, the fund's extension aligns with the government's efforts to overhaul planning laws, introducing a growth-focused National Planning Policy Framework that reinstates mandatory housing targets for councils across England.

UK Deputy Prime Minister and Secretary of State for Housing Angela Rayner said: “Smaller housebuilders have a critical role to play in our Plan for Change to help us build 1.5 million homes over five years and the government is fully committed to backing them to grow.

“Government loans are providing vital support to many housebuilders in the SME sector, but previous failures to provide ongoing funding meant the scheme had been set to shut its doors in March.

“They must be the bedrock of our plans. That is why I’m extending the fund so more of them can access the capital and investment needed to deliver thousands of new homes across the country and help us fix the housing crisis for good.”