EU investment arm to lend UK £1 bn for social housing

The EU's investment arm will lend the UK £1 billion for social housing, its largest ever support for such programmes within Europe, it said yesterday.

With the loan, housing associations would be able to build homes across the country and come on top of the £4.2 billion the European Investment Bank had  already provided for social housing and urban renewal in the UK since 1998, it added.

The paucity of affordable homes had emerged as a top political issue in the UK, with the shortage helping to push up prices, forcing many people especially in London and the south-east to rent for longer or buy homes further away from city centres.

Meanwhile, a referendum is scheduled in the UK on 23 June on whether the UK should remain in the EU. Polls had shown voters split on the membership of the  EU with a large number of people still undecided.

According to the EIB, which lent £5.6 billion for investment in 40 projects in the UK last year, the timing of the announcement had nothing to do with the referendum and that the decision had been made over months.

The decision comes as the latest loan to be awarded for UK projects, following on from £1 billion for energy infrastructure and renewable schemes.

"It seems like some in Luxembourg think they can buy the referendum with a couple of cosmetic loans," said a spokesman for Vote Leave, the campaign for Britain to quit the EU, Reuters reported.

According to shadow secretary of state for housing and planning John Healey MP, the money made it clear if the UK wanted more affordable homes, it needed to remain as part of the EU.

He added, conservative ministers had slashed investment for new affordable housing, so this new European Investment Bank funding was a vital contribution to tackling the spiralling housing costs in the UK.

The initiative would help build over 20,000 new affordable homes.