The fund, which has a four-year repayment term, will support small and medium sized builders to deliver homes and skilled jobs across the country.
In 2015, a study found there were potentially 7,600 homes on nearly 400 sites across Wales that could be developed but have stopped due to a wide range of reasons, from from pre development works and economic viability, to challenges in securing 'affordable' funding.
Speaking at the Builder Breakfast Roadshow at Parc Y Scarlets, Llanelli, Housing and Regeneration Minister Rebecca Evans said: "The Stalled Sites Fund provides £40m of funding to address this gap in the market and through recycling of this investment will make up to £160m available to SMEs over 17 years to help them build more homes in Wales.
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"We know that supporting small and medium-sized builders has a knock-on effect on the local economy, as they in turn use local suppliers to source materials and skills.
"That's why we are targeting smaller builders at this roadshow in Llanelli. Working with the Federation of Master Builders and local builder's merchants LBS, we are setting out exactly what help is available to SMEs to grow and develop."
Ifan Glyn, Director of the Federation of Master Builders Cymru, said: "Problems accessing finance limits the ability to unlock stalled sites which is a key barrier for small house builders in Wales, so this announcement is welcome.
"Welsh Ministers should be recognised for listening to the pleas of FMB Cymru and taking direct action to help local builders build. In Wales, we need to become less reliant on large house builders to build our way out of the housing shortage and measures such as this are a step in the right direction."
However, Mr Glyn added despite this move, there are a "multitude of other problems that small Welsh house builders face".
"Anecdotally, we know that the majority of Welsh firms find that the lack of available and viable land is the major barrier to increasing output," he said.
"More worryingly still, over half say that the number of available small sites is, if anything, decreasing. If the Welsh Government wants to meet the ambitious housing targets, it needs to ensure that the long-constrained SME housing sector can once again access viable land, as well as finance."
(LM/MH)
