Guarantees welcome but more grant needed, sector says

It saw almost £3.5bn of funding were leant to 64 housing associations, financing more than 28,000 affordable homes at no direct cost to the taxpayers.

Terrie Alafat, chief executive of the Chartered Institute of Housing, said: “It’s good news that it is coming back. We have always said this would be a sensible and positive move.”

She said the “key question” was whether or not it would fund homes that were “genuinely affordable” – including at social rents.

David Montague, chief executive of L&Q, added: “At face value, the guarantee scheme announced in the chancellor’s Spring Statement today is a positive step and will help with the delivery of affordable homes. However, we also need to see the detail and this cannot be a one-off investment – delivering homes on the scale needed requires continued investment especially through the uncertainty of Brexit.”

Paul Hackett, chief executive of Optivo and chair of the G15, said: “We do need to increase grant rates in order to increase social housebuilding but it is certainly something to be welcomed and I’m sure there will be high levels of take-up. Optivo will be interested in securing some of this funding. It will reduce our overall cost of debt and lower debt costs mean we can build more homes.”

Mark Washer, chief executive of Sovereign, said: “It’s clear the current uncertainty and instability is making long-term planning and investment extremely difficult for government.

“Although it’s good to see a continuing focus on infrastructure and growth, there simply needs to be more and sustained investment in social rented homes, as well as rethinking how we use and capture the value of the country’s land, in particular public land.

“The return of the Affordable Homes Guarantee scheme is to be welcomed, and we hope it can be used to access funding to support more social rented homes as well, to really help meet the housing need in the communities where we work.”

The previous guarantees scheme used funds from the European Investment Bank, which the UK will not have access to after Brexit, but the principle of guaranteeing loans will have largely the same effect, Howard Webb, director at Link Asset Services, told Inside Housing.

Mr Webb said this move would deliver “significantly cheaper” borrowing for housing associations.

He added: “You could be looking at spreads over gilts [the rate compared to government borrowing] of 25, 30 basis points [0.25%-0.3%] compared with 100, 150, 175 [1%, 1.5%, 1.75%] as we’re seeing in the debt capital markets at the moment.”

The Treasury was unable to confirm when the scheme will begin, who will manage it, what tenures it will fund and whether or not it comes from the previously announced £8bn.