A new government-backed ‘housing bank’ that it hopes will unlock billions in private sector investment to “turbocharge” housebuilding has been launched this week.

The National Housing Bank, a subsidiary of Homes England, will be publicly owned and backed with £16 billion of financial capacity, on top of £6bn of existing finance to be allocated this parliament.

The government says the aim is to accelerate housebuilding and leverage in £53 billion of additional private investment, creating jobs and delivering over 500,000 new homes.

This new approach will give Homes England the ability to issue government guarantees directly and have greater autonomy to make the long-term investments required to reform the housing market.

The government believes that with long-term, flexible capital, the National Housing Bank will be able to act as a consistent partner to the private sector, bringing the stability and certainty that housing developers and investors need to make delivery happen. It will also support SMEs with new lending products and enable developers to unlock large, complex sites through infrastructure finance.

Deputy Prime Minister and Housing Secretary Angela Rayner, said: “We‘re turning the tide on the housing crisis we inherited – whether that’s fixing our broken planning system, investing £39 billion to deliver more social and affordable homes, or now creating a National Housing Bank to lever in vital investment.”

The Bank will deploy some of the £2.5 billion in low-interest loans announced at the spending review to support build social and affordable homes.

Chancellor of the Exchequer, Rachel Reeves, said: “Our Spending Review last week delivered the biggest cash injection into social and affordable housing in 50 years as we progress on our promise to build 1.5 million homes.

“As part of our Plan for Change, the new National Housing Bank will unlock £53 billion of additional private investment – giving more working people the security of home ownership and investing in Britain’s renewal.”

Homes England Chair Pat Ritchie said: “The National Housing Bank responds to calls from the housing sector, mayors and local leaders to increase the scale of available public and private finance for housing and regeneration, provide a broader range of flexible debt, equity and guarantee products, and enable more timely decision making.”

The government will also work with the Mayor of London to establish a City Hall Developer Investment Fund, and support housing regeneration around London Euston, to help deliver London’s ambition to build around 80,000 homes per year. In Greater Manchester, the Housing Investment Loan Fund will be extended to deliver thousands of new homes over the next 10 years.