It’s been a bumper week for news about the proposed low-interest loans to housing associations from the National Housing Bank (NHB). It’s really positive that these loans will have an interest-rate of 0.1%, have a term length of 25 years and will be unsecured and subordinated. Has Christmas come early, or will it be a disappointment? 

We haven’t seen all the terms and conditions, but it does seem likely that it could make a big difference to housing associations building more social and affordable housing. It is great news that it is stated that they are unsecured, but will they require the housing association to allocate a suitable number of unsecured housing stock that the lender can call on if required? If they do require this, then it is not truly unsecured in my opinion. We read that the loans will sit at a corporate level, which suggests that they will not rely on any actual assets. We will watch this space.

Building any type of house is not cheap and in today’s world, £2.5B split between the housing associations will definitely help, but by itself will not turn the house building dial too much. However, the Government wants housing associations to combine grants made through the Social and Affordable Homes Programme, NHB loans and loans from the Affordable Homes Guarantee Scheme (AHGS) to be the catalyst for a large increase in housing associations’ development programmes. Therefore, housing associations should consider taking advantage of all these funding schemes if they want to maximise this opportunity.

Interestingly, the loans are being offered to for-profit and not for-profit housing associations. This is great news for the for-profit registered providers and really cements their place in the sector. We will wait to see if any for-profit registered providers apply, as they often rely on other organisations to do the development.

It appears that the Government are now living up to their promise of providing housing associations with a significant amount of funds to build more social and affordable homes. We don’t know all the detail and it’s going to take quite some time before we see the end result, i.e. more homes, as many other factors need to fall into place, for example, the availability of affordable land, planning permissions and having enough skilled labour. And so it is too soon to say that Christmas has come early, but hopefully the building blocks are being laid to enable more families to have Christmas in a new home rather than in temporary accommodation or in expensive and poor quality market rental accommodation.

How can we help?

For advice for your organisation on all areas of funding for housing associations, including bank loans, aggregator loans, capital markets, joint venture funding and more, please contact me.