Posted 14.11.12
New research for the Scottish Federation of Housing Associations explores long term funding options available to housing associations and co-operatives to help build new homes in Scotland.
The report underlines the importance of subsidy in developing affordable housing. It outlines a variety of models of longer term funding available to housing associations and co-operatives. The models reviewed fall into two broad types - debt finance and lease finance.
Housing associations and co-operatives are facing challenging times. The SFHA believes that recent announcements of additional funding for housing have not been sufficient to make up for the cuts made by the Scottish Government since 2009. Such investment, as is available, has been at lower levels of subsidy.
The lending environment has also changed, with shorter loan terms and at higher margins - all of which increase pressure on the sector's ability to increase the supply of housing.
The research, by finance and risk management experts Murja Ltd, concludes that none of the models are capable of delivering what the sector recognises as genuinely affordable social housing. While each option has its advantages and disadvantages, few cater for housing associations seeking amounts of less than £5 million.
The report identifies that developing without subsidy is unlikely to work in many areas because the rents that would need to be charged to cover costs would be so high as to be not affordable.
Finally, Murja emphasises that housing associations and co-operatives need to understand and appraise the risks of any new financial model, some of which are untested in practice.
Posted 28.11.12
The social housing sector remains financially strong and continues to access the funding it requires despite continued volatility, according to the latest Quarterly Survey (2012/13 Quarter 2) published by the Homes and Communities Agency.
However, providers will need to maintain a focus on robust financial planning and management if they are to continue meeting the regulator's standards.
As the regulator of social housing providers, the HCA undertakes a quarterly survey of housing providers to establish the levels of exposure to the risks faced by the sector. This latest report covers the period 1 July to 30 September 2012 and is based on a survey of all private registered providers owning and/or managing more than 1,000 homes.
As in the previous quarter, providers continued to turn to the capital markets with bond issues of £733 million accounting for 54% of the £1.3 billion new facilities arranged. Five large own-name bond issues raised £675 million.
Swap rates remained volatile and again decreased in the quarter, increasing the sector's mark-to-market exposure to £1.6 billion. This is an area the regulator will continue to monitor.
The Quarterly Survey can be download from the HCA website.
