NatWest has announced the launch of a new lending proposition, with up to £500 million ringfenced for the building of social rent housing across the UK.
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.
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. 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.
NatWest 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. 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, added: “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.”
