The Housing Finance Corporation (THFC) announced it has developed a new borrowing model, aimed at helping associations to pay for development costs but avoid long-term loans.
The Housing Corporation introduced changes in the way development grant was distributed in 2004. As a consequence, associations have to wait until onsite work starts before they can access allocated funds. This leaves the option of expensive long-term borrowing to raise working capital.
By using the collective borrowing power of a group of large developing landlords, the new funding mechanism will facilitate the securing of short-term economic loans to meet upfront development costs. The new system is to be launched by THFC for the start of the new financial year.
The new mechanism, named the commercial paper market, might also be of use to associations building without grant, which now only accounts for 50% of development funding.
Sanctuary Housing Group increased its borrowing with Nationwide by £100 million to £165 million. The new money will support the Association's development and regeneration programmes. The structure of the loan will allow the Association to act as an intermediary and pass part of the funding on to its subsidiary - Sanctuary Scotland HA.
Norwich Housing Society completed refinancing arrangements with Lloyds TSB. This includes £2 million of new borrowing, bringing the total package to £3 million. The funding will support the Society's new development of 18 properties in Norwich and a programme to refurbish 24 existing dwellings.
