To meet increasing demand for more places at good schools, and help families get on the property ladder, the education secretary Gavin Williamson has said up to £20m per school would be made available to builders.
It means new school places will be financed and delivered up-front as opposed to builders having to wait for new homes to be built and sold before having the money to deliver 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 – including on sites that have stood empty for a long period of time, the government said.
It is also expected to boost the viability of new housing estates, particularly those led by small and medium sized developers where cashflow is a significant issue.
The Developer Loans for Schools programme will be piloted from 2019 to 2021, in areas that meet a specific criteria.
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.
Build schools and homes together
Education secretary, Gavin Williamson, said: “In some cases, building schools and properties at the same time so they are ready for new communities can be challenging for housing developers.
“That’s why we are launching these loans today, to help parents secure a good school place for their child at the same time as moving into a new family home.”
Housing minister Esther McVey (pictured), added: “It’s only right that infrastructure is delivered up front – including thousands of new school places – which supports existing communities and the new homes which we need building.
“I welcome this support being made available today – helping medium and large sized house builders deliver new schools as they deliver the homes we urgently need.”
Developers interested in taking part in the pilot programme, 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.