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.

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.

Extending Right to Buy 'Could Add £60bn to National Debt'

Nearly £60bn of debt could be added to the national balance sheet under a Conservative plan to extend the Right to Buy to housing associations. The Office for National Statistics (ONS) said if the proposal led to an increase in government control over housing associations, the body - which is independent of government - may have to assess England’s 1,500 housing associations’ status as public bodies. Housing associations are currently considered private providers and carry their debts as private organisations. But if they were classified as public bodies by the ONS, their total debt would have to be carried on the national balance sheet. Read more on Inside Housing.