Housing Associations To Borrow £42bn Over Next Five Years

 Data collected by the Regulator of Social Housing (RSH) shows housing associations are expected to agree new debt facilities worth £42bn. This comes as the regulator predicts that total sector turnover will fall 7.6%, from £136.9bn to £126.4bn. The data comes from the RSH’s financial forecast returns (FFR) which is gathered annually from registered providers owning more than 1,000 units, and demonstrates the sector’s continued appetite for debt. Read more on Inside Housing.

https://www.insidehousing.co.uk/news/news/housing-associations-to-borrow-42bn-over-next-five-years-regulator-predicts-68686#:~:text=Housing%20associations%20to%20borrow%20%C2%A342bn%20over%20next%20five%20years%2C%20regulator%20predicts,-News24.11.20&text=Housing%20associations%20in%20England%20are,10bn%2C%20Inside%20Housing%20can%20reveal

Right To Buy Replacement Will Be All But Eliminated In Just Five Years

The current Right-to-Buy system only allows councils to keep a third of each RTB receipt to build a replacement home and prevents local authorities from borrowing to make up the shortfall. A new analysis by Savills, commissioned by the LGA, examined the impact of continued restrictions on councils’ ability to borrow to build new homes. It reveals that:

·         Two thirds of councils will have no chance of replacing homes sold off under Right to Buy on a one-for-one basis in five years’ time unless a significant restructuring of the scheme takes place.

·         Around 12,224 homes were sold under RTB last year. Faced with ongoing borrowing restrictions and based on the levels of sales remaining consistent, the analysis estimates that in 2023 councils would only be able to replace approximately 2,000 of these homes.

·         Less than a third of councils would be able to sustain any kind of one-for-one replacement of homes sold under the scheme in five years’ time.

Read more on the LGA website.

https://www.local.gov.uk/about/news/right-buy-replacement-will-be-all-eliminated-just-five-years-warns-lga

Social Housing: Ministers Move Debt To Boost Building

Plans to encourage housing associations to borrow money to invest in new homes are being announced as part of a fresh government house-building drive. Housing associations will be reclassified as private bodies allowing their £70bn debt to be removed from the government's balance sheet. Housing providers said changing their financial status would help them secure the "long-term finance" needed. But Labour said there was no coherent plan to address the "housing crisis". Read more on the BBC website.

Budget Must Let Councils ‘Take Back Control’ Of Housing Assets And Revenue

Next month’s budget must let Councils ‘take back control’ of their housing assets and revenue by committing to the principles of HRA self-financing for council housing, a new paper says. The paper sets out key asks on allowing councils to lift the HRA debt caps for new build purposes and relying instead on prudential borrowing rules to enable investment in new homes – paid back from rental income. Where government can’t or won’t commit, the paper offers a get out option – approve a number of bespoke deals as quickly as possible to create a group of “market leaders” who could share experience and good practice with others. Read more on the ARCH website.

Government 'Will Allow Borrowing Flexibility But Not Grant' For Fire Safety Work

Councils may be allowed increased borrowing freedoms and the power to switch funding from general funds to pay for fire safety work to high rises, but the government will not provide direct funding. This was the position revealed by Sajid Javid during a grilling by members of the CLG Committee. Mr Javid confirmed that 31 local authorities have asked for assistance paying for safety measures and that the government is in “detailed discussions” with six of those. He said the government was considering giving extra HRA borrowing flexibilities to the councils, and requests from “one or two” for a one-off transfer to be made from their general funds into their HRA, which is normally ringfenced. However, he said the government was not planning to provide grants for works. Read more on Inside Housing.

Home Buyers Up 12% In May Compared To April

On a non-seasonally adjusted basis, UK Finance data shows that mortgage lending in May rose:

·         Home buyers borrowed £10.8bn, up 10% on April and 16% on May 2016.

·         Within this, first-time buyers borrowed £4.7bn, up 12% both on last month and on May 2016.

·         Home movers borrowed £6.2bn, up 11% on April and 22% year-on-year.

·         Home-owner remortgage activity was up 10% by value and 9% by volume on April.

·         Gross buy-to-let totalled £2.9bn in May, up 16% on April and 12% compared to May last year.

Read more on the UK Finance website.

One In Three ‘Rent-Burdened Brits’ Borrow To Cover Home Costs

Housing charity Shelter is calling for the next government to step in and help ‘rent-burdened Brits’. New figures from Shelter and YouGov show tenants are being driven into debt to keep on top of their rent, with over half a million low-earning renters borrowing from credit cards, overdrafts or friends and family in the last year alone. Huge numbers of low-earning private renters are only just managing to keep a roof over their heads, with a staggering 70% either struggling with or falling behind on rent. As private rents eat up income, 800,000 hard-pressed private renters are not even able to save £10 a month according to a Shelter analysis of government statistics. Read more on 24housing.

Council Housing – Parliamentary Written Answer

Lord Beecham: To ask Her Majesty’s Government what assessment they have made of the impact of the reduction in council housing rents on (1) the maintenance and improvement of the existing council housing stock, and (2) the building of new council houses between now and 2022.

Lord Bourne of Aberystwyth: I refer the noble Lord to my previous answer to him on 27 March - PQ HL6120. As stated in the Housing White Paper, the Government will in due course set out a rent policy for social landlords for the period beyond 2020 to help them to borrow against future income. Our aim is to ensure that they have the confidence they need about their future income in order to plan ahead.

Decline In Home Buyers In The Capital In 2016

Home buyers in London declined 3% in the fourth quarter of 2016, according to the Council of Mortgage Lenders (CML). According to its latest figures, in the fourth quarter, home buyers in the capital borrowed £5.9bn for house purchase, down 5% quarter-on-quarter and 13% year-on-year. They took out 18,500 loans, down 3% compared to the previous quarter and 15% on the fourth quarter 2015. Furthermore, first-time buyers borrowed £3bn, down 3% on the third quarter and 4% on the fourth quarter last year. This equated to 11,000 loans, down 2% quarter-on-quarter and 7% year-on-year. Read more on Housing Excellence.

House Purchase Lending Up 5%

On an unadjusted basis, in November:

·         Home-owners borrowed £11bn for house purchase, up 5% month-on-month and 2% year-on-year.

·         First-time buyers borrowed £4.7bn, up 4% on October and 9% on November last year. This equated to 30,100 loans, up 5% month-on-month and 8% year-on-year.

·         Home movers borrowed £6.3bn, up 7% on a month ago but down 5% compared to a year ago.

·         Remortgage activity totalled £5.8bn, down 5% on October but up 14% compared to a year ago.

·         Landlords borrowed £3.2bn, up 10% month-on-month but down 9% year-on-year.

Read more on the CML website.

Releasing Untapped Potential For More Housing

A new report from Savills says housing associations (HAs) have the financial capacity to more than double their output and bring forward 44,000 extra new homes by 2029 through additional asset-backed borrowing. Some form of subsidy is critical to deliver these homes across a range of tenures and to achieve affordability. In the absence of grant, HAs would need to secure land at zero or low value to deliver shared ownership or affordable rent housing. Almost half of the additional financial capacity to become a new class of home builder rests with large scale voluntary transfer (LSVT) associations, particularly larger ones. Download the report from the Savills website.

Housing Associations Could Borrow £7.4 Billion

The Government drive for increased new housing supply is putting political and financial pressure on housing associations to increase their housing delivery, a challenge the sector could be well positioned to respond to quickly by unlocking additional financial capacity, Savills says. New analysis by Savills suggests that up to £7.4 billion of additional borrowing could be secured against assets to be used to deliver more homes. Housing associations delivered 40,000 new homes in 2015/16, around a fifth of all new homes, with around 43 per cent outside the Affordable Housing Programme.  Savills calculates that this additional borrowing capacity is both supported by balance sheets and fundable from existing cashflow. Read more on the Savills website.

August House Purchase Lending Up 11%

in August:

·         Home-owners borrowed £12.2bn for house purchase, up 14% month-on-month and 11% year-on-year. They took out 66,000 loans, up 13% on July and 9% on August 2015.

·         First-time buyers borrowed £5.1bn, up 13% on July and 24% on August last year. This equated to 31,800 loans, up 12% month-on-month and 19% year-on-year. 

·         Home movers borrowed £7.1bn, up 15% on July and 3% compared to a year ago. This represented 34,200 loans, up 14% month-on-month and 1% on August 2015.

·         Remortgage activity totalled £5.9bn, down 2% on July but up 41% compared to a year ago.

Read more on the CML website.

Home-Owner House Purchase Lending Down In April

·         Home-owners borrowed £8.1bn for house purchase, down 40% month-on-month and 4% year-on-year. They took out 47,300 loans, down 31% on March and 5% on April 2015.

·         First-time buyers borrowed £3.9bn, down 11% on March but up 15% on April last year. This equated to 25,100 loans, down 9% month-on-month but up 7% year-on-year. 

·         Home movers borrowed £4.3bn, down 53% on March and 14% compared to a year ago. This represented 22,200 loans, down 46% month-on-month and 15% on April 2015.

·         Landlords borrowed £2.5bn, down 65% month-on-month and 7% year-on-year. This came to 16,100 loans in total, down 64% compared to March and down 10% compared to April 2015.

Read more on the Council of Mortgage Lenders website.

Renters Are 'Forced To Borrow Money To Pay For Moves'

London’s army of renters are being forced to move home with increasing frequency, putting a strain on jobs, finances and family life, new research has revealed. Four in 10 have changed home three or more times in the past five years, according to a study commissioned by housing charity Shelter. Around 650,000 private renters in London have been forced to borrow money to pay for a move, or have fallen behind on other commitments because of the costs of moving. Others report that their children suffered stress or that they had to change their working hours. Read more on the Evening Standard website.

New Right-To-Buy Could Add To Housing Provider Challenges

The Conservative Party's announcement that it would offer 1.3 million tenants of registered housing providers (RPs) the right to buy their home could add to pressure on RPs' financial flexibility. If the proposed extension materialises following the election and the pace of sales accelerated, RPs' borrowing capacity could be constrained as their balance sheets would weaken and the value of their available housing assets pledged for borrowings would decrease. This would constrain the RPs' overall capacity to borrow even though the need for social housing is high due to strong demand across the country. The reduction in the available security could also lead to higher borrowing costs. The envisaged extension could lower the RPs' cash flow predictability. Decreasing numbers of social housing units would lead to a fall in RPs' share of social housing revenue. This could put pressure on some ratings. Read more on the Fitch Ratings website.

Buy-To-Let Borrowing Grows While Other Buyers Struggle

Landlords are the only group borrowing more than a year ago, according to the latest lending industry data, while first-time buyers and ordinary homeowners are taking out fewer loans than at the same time last year. The Council of Mortgage Lenders figures for November confirmed the general slowdown in the housing market already evident in much data from other sources. But they also highlighted the fact that buying-to-let remains in rude health, with lending to landlords up 9pc compared with the year before. Overall lending to mainstream home-buyers fell by 7pc over the year to 55,600 loans in November. Lending to first-time buyers was 3pc down on the year before. Read more on the CML website.

CLG Considers Change to Help LSVTs Borrow

The government is considering a proposal to boost the borrowing capacity of stock transfer associations by changing the way they are allowed to value their properties. The CLG confirmed this week it is looking at a proposal from the National Housing Federation (NHF) to allow large scale voluntary transfer (LSVT) associations greater freedom over how they value their stock. Current legislation requires LSVTs to use a system called Existing Use Value Social Housing (EUVSH) to value stock, whereas other housing associations have the option to use a system called Market Value Subject to Tenancy. EUVSH values stock at around 30% to 45% of what the stock is actually worth - compared with 60% for MVST. Read more on Inside Housing.

Labour Will Not Lift Cap on Council Borrowing For Housebuilding

Ed Balls has toughened Labour's fiscal position by pledging not to fund any new policy pledges through extra borrowing. But what about allowing councils to borrow more for housebuilding? The idea was being explored as part of the Lyons Review, which is examining how Labour can meet its pledge to build 200,000 homes a year by 2020. There are good reasons for doing so. The CIH estimates that raising the cap by £7bn could enable the construction of 60,000 homes over the next five years. Despite this Labour will not pledge to lift the cap. A spokesman for Ed Balls said: "We want to prioritise housing, but we also want to be fiscally responsible." He suggested that the 200,000 target could be met through other sources such as self-builders and SMEs. Read more on the New Statesman website.

Housing Revenue Accounts – Parliamentary Written Answer

Tim Farron: To ask the Secretary of State for Communities and Local Government what steps his Department is taking to assist local authorities in acquiring necessary skills, partnerships and capacity to utilise the increased borrowing allowed against the Housing Revenue Account (HRA). 

Kris Hopkins: This Government has made available £300 million of extra HRA borrowing to help stock-holding local authorities build new affordable homes. The first allocations of £60 million across 15 local authorities was announced on 7 July alongside a second round of bidding to ensure councils make full use of this opportunity. Each scheme was assessed individually against a range of criteria including value for money and deliverability as well as the track record of the local authority to ensure they had the technical capacity to deliver the schemes or with a partner organisation. We have also encouraged councils to work closely with their local enterprise partnership in support of local growth strategies, to increase the supply of housing locally. (Extract)