SAFE AS HOUSES? NOT FOR THE LENDERS
WHY THE HOUSING BILL IS UNDERGOING REVISION
Wednesday 20 March 1996
Lenders were appalled by the proposals. By restricting transfers to registered social landlords, the full market price for assets might not have been realised, while lenders would have been prevented from taking possession of the assets that loans were secured against.
The Department of the Environment is now committed to redrafting the offending clauses, in line with compromise proposals drawn up by the Bradford and Bingley Building Society. "Our counter proposals provide housing associations with a 28-day breathing space to come up with a solution to keep assets within the social-housing sector, as opposed to the solution proposed by other lenders to sell into the open market," said Nigel Straw, the housing development manger with the Bradford and Bingley.
"Lenders would be committed to a moratorium for 28 days while an association gets itself together," added Mr Straw. "That is the fundamental difference from the Bill, where lenders' rights were trampled upon."
Although all parties seem happy with this solution, serious damage has already been done. Lenders are openly saying that they are much less willing to lend to the sector. Several large loans provisionally arranged for housing associations have now been put on hold, some are expected to fall through and hundreds of millions of pounds worth of planned developments may have to be abandoned.
Lenders argue that the Government's proposals have undermined years of co-operation between the private sector and housing bodies. "The Housing Corporation and housing associations have done everything possible to persuade lenders to lower their security requirements," said Clive Barnett, director of housing finance at NatWest Markets.
"The proposals would have changed the basis of lending. We will now have to review our sector exposure, and we are the biggest arrangers of loans in the sector. Some people will now be put off lending to the sector, irrespective of what becomes of this. Damage has been done and will not be undone in the short term," Mr Barnett added.
For the lenders, arrangements for the transfer of assets is merely the latest factor that has undermined their confidence in lending to housing associations. More than 60 per cent of tenants are in receipt of housing benefit, and continuing reform of the benefit has raised fears among lenders that there could be a reduction in income and an increase in arrears.
And last autumn's Budget had proposed ending what is, in effect, a tax exemption for non-charitable housing associations, to allow them to compete on an equal basis with associations that are registered charities. Implementation has been delayed, but the threat remains. The Department of the Environment intends to proceed with the reform as part of a further Housing Bill, which would also allow the private sector to compete for grants to build and manage social housing, at the first legislative opportunity.
These factors together have made lenders wary about associations. It is suddenly clearer than ever that the sector is vulnerable to the vagaries of politics, which can be even more unpredictable than the market. Lenders had always assumed that loans to associations were largely risk-free, as the Housing Corporation was seen effectively to underwrite bad debts in the sector. This assumption, too, is being questioned.
It is a situation that is worrying the Housing Corporation. A spokeswoman said: "We regret any loss of confidence in the sector, but we think there are a lot of reasons to be confident, as housing associations still represent a long-term good investment."
The problem has been exercising minds at this week's National Federation of Housing Associations conference for finance directors. As John Bryant, NFHA policy officer, said: "The Government sees housing associations as one of its great successes, in getting private finance involved in social housing, and producing much more housing than would have been the case with just public money. Now we see this beginning to be put in question by the Government's own actions."
Independent Partners; request a free guide on NISAs from Hargreaves Lansdown
- 1 Snoop Dogg and Jared Leto buy a stake in Reddit as A-list invests $50m
- 2 Prince held a Facebook Q&A and this is the only question he answered
- 3 'F*ck it, I quit': KTVA reporter Charlo Greene quits live on air in spectacular fashion
- 4 35,000 walrus gather ashore on north-west Alaska beach 'for a rest'
- 5 A teacher speaks out: 'I'm effectively being forced out of a career that I wanted to love'
Exclusive: 'Putin's Russia has been my biggest regret,' says Nato's outgoing Secretary General
The Osborne Ultimatum: Chancellor’s benefits freeze bombshell will affect ten million households
There’s no excuse for Dave Lee Travis’s behaviour, but we need to keep a sense of proportion
Should gay sex be illegal? 16% of Britons think so
Mark Reckless becomes second Tory MP to defect to Ukip in a month
Benefits 'smart cards' plan revealed by Iain Duncan Smith to stop claimants spending welfare money on alcohol
- < Previous
- Next >
iJobs Money & Business
£18000 - £23000 per annum + Commission: SThree: Real Staffing are currently lo...
NEGOTIABLE: Austen Lloyd: TRUST ACCOUNTANT - KENTIf you are a Chartered Accou...
£18000 - £20000 per annum + OTE £30000: SThree: SThree are a global FTSE 250 b...
Highly Competitive Salary: Austen Lloyd: CITY - Law Costs Draftsperson - NICHE...
Day In a Page
Four exclusive apartments in a Grade II-listed former medical school with 2,275 sq ft of living space and 18ft ceilings
A five-bedroom terraced house on the popular Peterborough Estate, ideally located for both Eel Brook Common and South Park
A state-of-the-art farm-building conversion on the former Cliveden Estate, with 11,420sq ft of internal space, cinema and wine cellar
A three-bedroom, 15th-century cottage with original features in the picturesque village of Sissinghurst
A six-bedroom terraced house with large south-facing roof terrace, cinema room and wine cellar
A new seven-bedroom home built in Queen Anne-style with swimming pool and parkland views in Mortimer
A listed, four-bedroom farmhouse in the rural hamlet of Rushall with detached barn, four acres of gardens and paddocks
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village
A one-bedroom, luxury apartment with private gym and concierge service in Moorgate
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens
A seven-bedroom Grade II-listed property with a separate self-contained apartment
A five-bedroom Victorian house with three reception rooms and galleried landing, £695,000
A six-bedroom farmhouse with five acres of land in a former cloth-making village
A secluded seven-bedroom detached house with large private garden, £490,000
A three-bedroom cottage overlooking Sarratt village green with open fires and solid oak floors