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Financing a new affordable housing supply – towards a nil grant solution

12/06/2012 12:03

We’ve recently read with interest the National Housing Federation’s response to central government regarding the delivery of affordable housing, with particular focus on how the government could ensure that sufficient resources are available to support the delivery of future housing projects (http://bit.ly/KOfaCe).

With a serious gap in funds for the supply of affordable housing, there is now a need for viable long-term solutions, which is something that Carlton & Co is able to provide.

The funding gap

Following the Comprehensive Spending Review in 2010 – during which the capital budget from government to build affordable homes was axed by 63 per cent – the economic downturn has made matters worse, as it means there is now a lack of public funds to help support the delivery of much-needed affordable housing projects.

Historically, bank borrowing and government grant provided sufficient funding options. But there is now pressure on the banks and they are moving towards shorter-term loan periods of between five and 10 years, which also means there is now a re-pricing risk that adds uncertainty and complexity to housing associations’ future business plans.

The need for innovation

But there are other options available for the affordable housing sector in the form of innovative funding opportunities. In its report, the National Housing Federation emphasised the need for a sustainable investment model which should be underpinned by various principles, including support for the development of large-scale affordable housing – with a range of tenure options – as well as being viable for housing providers to deliver and also supporting flexibility and innovation.

Our solution

And this is where Carlton & Co can help.  We work with a range of institutional investors who are increasing their exposure to the residential sector, and collectively we can contribute towards filling the gap left by the cut in public funds and lack of traditional bank funding.

Due to the current uncertain financial markets, investors are seeking robust long dated income streams – and the affordable housing sector offers a number of viable investment strategies that provide a ‘win-win’ for investors and housing associations.

We agree whole-heartedly with the National Housing Federation’s view that securing institutional investment in residential property has been a “Holy Grail” of innovation in financing a new housing supply.  Our solution involves working closely with all key stakeholders including pension funds, fund managers, investment advisors, registered providers and local authorities to structure investment, funding and delivery solutions that meet the needs of all stakeholders, and more importantly can be delivered in many areas with nil grant.

To find out more, visit www.carltonandco.com or contact us on 0845 805 7442.

 

 

 

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