Look East

George Papandreou might not like to be reminded of it, but money knows no borders.

This week’s International Housing Summit in Rotterdam brought home the fact that, for the UK’s social landlords, the need to spread the funding net as wide as possible is more vital than ever.

For two days in Holland, delegates heard familiar tales of squeezed government subsidy, a shortage of long-term lending and a housing sector that faced a greater and more urgent demand for housing than ever.

Only this time, it was made clear that the problems are not confined to this sceptred isle, but are global.

There are now more than seven billion people on Earth to find homes for, and those homes are not going to pay for themselves.

So Steve Binks’ address to the conference on new sources of funding could not have been more timely.

As finance director at Places for People, Mr Binks has never been afraid to push the boundaries of housing association funding.

And the revelation that he has made exploratory investigations into tapping the vast reservoirs of cash sitting in the hands of investors in the Middle East and China shows that his appetite for new money has not yet been satisfied.

As any Man City fans will tell you, state-backed Middle Eastern finance can be something of a game changer for those on the receiving end.

Headline-grabbing as this is in theory, there are a few major caveats attached.

The received wisdom about these types of investors is that they look for one of two things: good returns or trophy assets.

Stable and vital as social housing is as an asset type, it can hardly lay claim to being either hugely profitable or kudos-laden.

After all, no one has yet suggested the inauguration of a housing Champions League (though with the coalition’s housing strategy still being stitched together, we can but hope).

And this is not the first time that sovereign wealth funds have been targeted by the sector.

But the timing could be right, with high returns harder to find than ever and stable income streams looking increasingly attractive.

If anyone can unlock the door to the mid and far East, it is Places for People.

After all, this is the association that launched the first retail bond earlier this year, and was not afraid to pay a high price for the harder to quantify exposure that came with it.

‘People don’t know who we are or what we do’ was Mr Binks’ damning indictment of the sector’s past efforts at selling itself. It’s something he’s actively trying to change.

The cry from many in his audience was that while such flights of financing fancy are all very well for Mr Binks’ organisation, it is playing a different ball game from most of the rest of the sector.

It’s all very well for a 62,000-home landlord with assets worth nearly £3 billion to fly off to China, but what about a lowly 1,600-home LSVT?

The answer, of course, is that they are operating in different arenas but might not be forever.

The consolidation of landlords – even across international borders, according to one speaker - is becoming a more likely scenario, and Places for People is not a lone voice telling associations to spread their wings and leave the parochial nest.

Family Mosaic chief executive Brendan Sarsfield thinks that PfP are just ahead of their time.

‘They’re in a position that I think all of us will be in five years’ time,’ he told the conference. ‘They are doing the cutting-edge work that all of us will be doing.’

If that’s true, it will do no good for finance directors to keep their heads in the sand and hope the financial storm passes them by.

Maybe it’s time to look to the east instead.