The UK will receive £1bn in social housing investment from the EU’s bank in order to support the construction of an estimated 20,000 new homes.

The funding from the European Investment Bank (EIB), working in partnership with the Housing Finance Corporation (THFC), represents the largest ever support for social housing by the bank anywhere in Europe.

The move is an expansion of the Affordable Housing Finance initiative – a £500m loan to registered social housing providers – which was signed in December 2013. The new 30 year long-term EIB loan will be matched by THFC, and will benefit from a government guarantee.

£500m of the new loan was signed earlier this year and the remaining £500m will be signed in the coming weeks.

The projected 20,000 new homes are expected to be built by a wide range of housing associations, from the largest London-based associations to smaller ones operating outside the capital.

More than 70 associations have already applied for financing under the new Affordable Housing Finance initiative and others are expected to be assessed in the coming weeks.

Jonathan Taylor, the EIB’s vice president, said: ‘The European Investment Bank has a firm commitment to supporting investment in social and affordable housing across the UK, where we provide nearly half of overall EIB support for social housing in Europe.

‘This record new backing builds on a successful partnership with THFC and the EIB’s strong track record of providing nearly £2bn for investment in social housing by more than seventy housing associations across the country.

‘Local investment under this initiative will improve lives, create jobs and cut heating bills in homes across the UK.’

The European Investment Bank has provided more than GBP 4.2 billion to support investment in social housing and urban renewal across the UK since 1998.