04 April 2003
Private lenders are being offered fewer opportunities to fund new social housing because of uncertainty over stock transfers.
With many councils keen to set up arm's-length management organisations as an alternative to transfer, there are doubts over how much private finance may be required in the short term, says a new report.
The annual Private finance monitoring bulletin, published by the Housing Corporation and the National Housing Federation, shows that an extra £2.8bn was committed to social housing in 2001/02 – up by 12% on the previous year.
However, the rate at which new money is being borrowed by registered social landlords is slowing down. In 2000/01, there was an increase of £3.5bn or 17.8%.
Since private funding was introduced in 1989, the sector has raised a total of £26bn.
Stock transfers have become less popular during the past 12 months – a fact that should be reflected in next year's bulletin. But this year's report suggests that Almos may already be having an impact. It concludes: 'While there are continuing opportunities for private finance in the sector, there is some uncertainty as to the size of the market.'
The social housing market is dominated by four lenders which together account for more than half of all funding. The largest is the Nationwide Building Society, which up to April 2002 had committed £3.6bn to RSLs.
Keith Reeve, chief manager of Nationwide's housing department, said he did not expect transfers to take off again for another 12 to 18 months: 'Potentially there are going to be fewer deals on the table.'
Lenders would want to work closely with existing customers as well as looking for new opportunities, including the Private Finance Initiative, he added. Nationwide is part of a consortium that last week signed a £90m Private Finance Initiative deal to improve council housing in Manchester.
Bob Wilson, policy officer at the National Housing Federation, said the market remained healthy for RSLs and lenders. 'We are always actively trying to attract more players but there is no evidence of a gap between supply and demand,' he said.
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