Filter
Filter

Filter

Filter content by topic
Brexit
Finance
Mergers and Acquisitions
Pay and pensions
Regulation and Governance
Asset management
Development
Markets
Accounts
People
Deals
Grant
Insight
Projects
Market sale
HAs below 5000
View All

North East: 'Lack of security should not stifle development'

Registered providers in the North East are advised to build relationships with investors, as debate tackles asset values and ‘pushing back’ over grant levels.

Linked InTwitterFacebookeCard

Social Housing regional roadshow, North East of England Newcastle welfare reform affordable rent

An absence of security headroom should not prevent housing associations from developing new homes, Social Housing’s north-east seminar heard.

The debate in Newcastle, hosted by Home Group on 4 December 2014, also raised the question of when the sector will ‘push back’ against low levels of grant subsidy.

Alex Gipson, social housing lending manager at Legal and General Investment Management, said ‘one challenging discussion’ with RPs at present is how far associations can take debt capacity in the future.

‘When do you turn off the tap; when do you push back on government and say actually there needs to be a greater balance of subsidy required for what ultimately is a subsidised product that you’re delivering?’ he said.

‘We very much view you as organisations in your own right, that at the moment benefit from government support. What we need to be comfortable with is that you can continue to do that, as invariably government strategy will change over time,’ he added.

Keith Loraine, chief executive of Isos Housing Group, questioned whether the government’s move towards equity investment rather than grant could lead to a regional differential across the country.

‘The reason Scotland has got high grant rates is because HAs refused to work at the punitive levels that are being suggested,’ he said.

‘We [in England] have never done that because there’s always been an association next door who would keep on taking the level further and further down because we’ve all been so keen on developing.

‘We’ve now got some associations working with no grant. I wonder whether that’s going to create a real regional differential; the HAs in the South creating huge wealth, the HAs in the North unable to do that, because we can’t create the margin on sales, or rents.’

Driving asset value

The seminar heard that the North East has a number of similarities to the Scottish market, where there is a lower gearing and debt per unit level, but very little unencumbered stock.

This raised the issue of lenders having ‘leverage’ by holding security on stock, and the need for commercial discussions which may result in a cost to unravel legacy restrictions and existing consents.

Heather Ashton, resources director at the newly formed Thirteen Group, asked investors for a view on the proposed consultation on the S133 restriction, which currently limits the loan security values of transferred properties to EUV-SH.

Mr Gipson said: ‘Absence of security should never stop you developing. The ability to develop or not is about how sustainable your business model is and as a result how sustainable is your income.

‘This isn’t development finance where there are lots of risks if they don’t sell, this is about you being able to deliver a product where there is real and growing rental demand.

‘To have a position where we fund you during construction ought to work very naturally for us.’

Click on the PDF below for more on the north-east event and to view the regional supplement in full.


Read More

Merger creates new housing player in the North EastMerger creates new housing player in the North East
Newcastle BS continues social housing loanbook wind downNewcastle BS continues social housing loanbook wind down
North-east merger to create 23,500-home regional housing groupNorth-east merger to create 23,500-home regional housing group
Our merger creates a new name in housing in the NorthOur merger creates a new name in housing in the North


Related Files

Social Housing regional roadshow, North East of EnglandPDF, 9.7 MB

Linked InTwitterFacebookeCard
Add New Comment
You must be logged in to comment.

Related Stories

For general enquiries you can contact Social Housing at:

3rd Floor, 4 Harbour Exchange Square, Isle of Dogs, London, E14 9GE

Tel: 0207 772 8300
Fax: 020 7772 8590/91

© 2019 Social Housing
All rights reserved
Twitter
Facebook
LinkedIn