Image: Ilfracombe CLT onsite – credit Aster Homes
September 2026
Almost a year ago, we wrote about one of the biggest barriers facing communities trying to develop new homes: early stage finance. Getting a community led housing project from an identified site to planning consent typically costs around £15k per home – and this is exactly the stage where finance is currently hardest to find.
As we noted then, social/ethical lenders won’t lend against early development risk. Housing associations cannot take on projects with so much upfront uncertainty, and revenue grant funding is now extremely difficult to fully secure. Grant programmes like the Community Housing Fund have filled this gap – see our review of the fund – but even after winning the support of Secretaries of State we have been unable to persuade the government to re-open it).
This is why the CLT Network partnered with Middlemarch CLH CIC to develop the Pre-Development Catalyst: a new source of recyclable finance for the crucial, risk-heavy early stages of community led projects. Our aim is to reduce early risk so housing associations or developers can step in, raise development finance, and work with communities to build the homes they need. This work is building on years of experimentation and research, and a deep dive into why previous attempts at revolving loan funds have failed.
Nearly a year on, the Catalyst has moved from a business plan on paper to an active vehicle taking shape. Here’s where things stand.
What is the Catalyst?
The Catalyst is a recyclable finance pot, not a grant fund. It will pay circa.£15,000 per home to specialist enablers and directly to community led housing organisations, to cover the work needed to get a scheme to an “oven ready” state, including:
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- site surveys and investigations
- architectural and technical design
- planning fees and professional costs
- legal costs
- other essential pre-development work.
Once a scheme has planning consent, a partner housing association or developer can raise the capital finance needed to take on the scheme, and to build the homes. At that point the scheme is commercially fundable. The partner repays the Catalyst using that capital finance, allowing the same funds recycled into the next project.
The aim is to unlock a pipeline of community led housing by filling the funding gap at the most vulnerable stage of development.
Talking to investors and government
Over the past year, we’ve tested the model with prospective social investors, charitable foundations and government officials. One message has been consistent: the Catalyst needs catalytic capital at its foundation – specifically a layer of first loss capital that can absorb some of the early risk and make it possible for other investors to participate.
That has shaped our current conversations with the Government about a potential public sector role in providing that buffer. Nothing is committed yet, but discussions are live and constructive. Securing this catalytic layer is the single most important step before the fund can move from development into deployment at scale.
Deploying with discipline
Catalytic capital is only half the story. Investors have also been clear that they need confidence in how disciplined the fund will be in allocating it. That’s why every project seeking Catalyst finance must pass through five pre- qualification gateways:
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- technical support (a specialist enabler experienced in supporting partnerships)
- planning viability (permission in principle, or another positive indication from planners such as a pre-app consultation)
- local community backing through an active community led housing organisation
- land control (e.g. heads of terms agreed with a landowner)
- a housing association/developer partner committed to repaying the Catalyst at key milestones
Only projects that meet all five gateways will receive funding. No project skips the queue, however promising it looks.
These set a high bar. But our work has shown us that we simply cannot raise investment, and cannot recycle the money, if we lower the bar. We will need complementary funding to expand and upskill the network of specialist enablers, and to ensure they have some working capital to get projects through these five gateways.
The pipeline is real
This isn’t a fund looking for a purpose. Middlemarch and other specialist enablers already have a pipeline of over 200 homes that could progress once pre-development finance is available. We saw with the Community Housing Fund that, with suitable funding, this pipeline will quickly grow again.
Our original ambition is to build a fund of £10m–£15m. We’re taking a pragmatic approach: starting with £5m–£11m, demonstrating the recycling mechanism in practice, and then building towards the full fund as confidence and evidence grows. Current modelling suggests that £11m could unlock 950-1000 new community led homes.
What happens next?
Through the rest of the autumn, our focus is on turning the structure into an operating vehicle and preparing for the first projects.
We are urgently seeking funding and support for our next steps:
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- incorporating the Pre-Development Operating Company.
- establishing independent investment governance, including an investment committee and due diligence framework, so lending decisions are transparent, robust and properly governed from day one.
- building the operational infrastructure, including configuring Salesforce to manage the pipeline, loan drawdowns and partner contracts.
Alongside this, we’ll continue conversations with government, investors and foundations to raise the capital needed to unlock the fund at scale.
Get involved
The Catalyst will only work if the wider community led housing ecosystem gets behind it.
For housing associations, it offers a route into community backed, locally supported schemes without carrying all the early planning and development risk.
For investors and foundations, it offers an opportunity to put patient capital behind permanently affordable, community owned homes – with capital recycled into new projects to create impact again and again.
If you’d like to explore partnering, co-funding, investing or contributing expertise, get in touch with the CLT Network team ([email protected]).
The funding gap at the start of a community led housing project may be small compared with the overall cost of building a home. But closing that gap could unlock hundreds of homes that otherwise may never get off the ground.
Alison Ward, Middlemarch CLT CIC, September 2026