The Department of Education of the UK Government is offering loans to housing developers to boost new house and school building momentum. Housing developers will be given loans to deliver thousands of school places upfront, so they are ready for communities before new properties are finished.

To meet the rising demand for more places at good schools, and help families get on the property ladder, the Education Secretary Gavin Williamson announced that up to GBP20 million (US$25.28 million) per school would be made available to builders. It means new school places are financed and delivered up-front – rather than builders having to wait for new homes to be built and sold before having the money to build the development. The loan will be charged at interest, and repayable once new homes are sold.

The scheme will incentivise developers to build more properties in the areas most in need.

The new schools will build on the 921,000 new school places created nationwide since 2010, leaving the Government on track to deliver a million new places by the end of the decade, and rising standards in schools – with 85% of schools now judged good or outstanding, up from 68% in 2010.

This initiative also helps to boost the viability of new housing estates, particularly those led by small and medium-sized developers where cash flow is a significant issue.

The Developer Loans for Schools program, launched in partnership with the Ministry of Housing, Communities and Local Government, will give parents even more choice of a good school place through a pilot, running from 2019 to 2021, in areas that meet specific criteria, including:

• Demand for more good school places;
• An approved application to open a new free school before the loan changes hands;
• Planning permission to build extra homes;
• Demonstrable value-for-money of the project;
• Early funding required for the school as part of housing developments; and
• The borrower must be a UK-registered company and must own the site.

Housing developers are already expected to contribute to the costs of new schools to help meet the need arising from new housing but can struggle to raise the funds to get schools ready in time for families moving to new developments. The new loans will help plan mixed-used developments – which offer new homeowners an entire community as well as a new home – more effectively.

Developers interested in taking part in the pilot program, which will initially offer around 10 loans to successful bidders can express their interest and submit their project proposals to the Department for Education from October 2019 – all projects will need to demonstrate value for money, affordability, and must meet the eligibility criteria outlined in the released prospectus.