One Housing Group details 'groundbreaking' shared ownership deal

One Housing Group signed an £85m loan with M&G Real Estate in March, based heavily on the value of its shared ownership portfolio has been hailed as “groundbreaking” by the National Housing Federation (NHF).

Paul Rickard, group director of finance and resources at One Housing Group, lifted the lid on the deal at the Social Housing Finance Conference last week.

“This is the first time anyone has done a specific shared ownership funding deal,” Mr Rickard told Inside Housing. “We are sweating the assets that were previously not being used.”

John Butler, finance policy officer at the NHF, said the average percentage of shared ownership properties that could be used to secure a loan is “typically around 15%”.

He added: “This is a groundbreaking deal and one which is vital in ensuring the government’s Affordable Housing Programme will reach its shared ownership target.”

The deal came about after One Housing, which manages 17,000 homes in London and the South East, launched a search for two separate loans. The association wanted a £50m facility on standard terms alongside £35m based solely on the value of its shared ownership portfolio.

“The finance was sought for core business liquidity,” said Mr Rickard.

“We had various conversations with investors over shared ownership funding and they were concerned about what would happen if the properties became staircased or fully owned, or if our operating model changed and we no longer built these kind of homes.”

One Housing said it could substitute affordable or social housing into the deal in this case.

“While many investors considered this and came back with complex structures, M&G was comfortable with it and actually offered us £85m in one deal, secured 70% against shared ownership [properties],” said Mr Rickard.

“The deal gives us flexibility about how we use our assets and reduces execution risk.”

He added that the landlord would “quite possibly” do similar deals in the future.

He added that One Housing had used sharia-compliant finance – where no interest is paid, in compliance with Islamic law – among a range of investment tools in the past.

“We have used a sharia-compliant loan. It was useful for a private sale scheme. We would use it again if the situation was right and the price was competitive.”