You are viewing 1 of your 1 free articles
4 things we learned from our interview with government guarantee lender Venn
Inside Housing Living has published an in-depth interview with Venn, the investment manager that manages the £6bn UK Affordable Homes Guarantee Scheme for the government. Denise Chevin reveals the key takeaways
Inside Housing Living has published an in-depth interview with Venn, the investment manager that manages the £6bn UK Affordable Homes Guarantee Scheme for the government. Denise Chevin reveals the key takeaways #UKhousingIn the latest instalment of its ongoing investor interview series, Inside Housing’s sister publication Inside Housing Living sat down with investment manager Venn.
The firm currently manages and deploys £11bn across its housing strategies, including the £6bn government-backed UK Affordable Homes Guarantee Scheme.
Read on for four key things we learned from Oriane Auzanneau, managing director at Venn, then click here to read the full interview on Inside Housing Living.
Housing associations benefit from lower borrowing costs
Venn lends directly to housing associations, then raises funding through bonds issued to institutional investors.
“Because the bonds that we issue benefit from a guarantee from UK government, they bear the credit rating of UK government,” says Ms Auzanneau.
Read more
Crucially, for the affordable housing guarantee programme, the benefit of the lower pricing flows through to borrowers.
“Because we pass the pricing down to our social housing borrowers, they pay a much lower price than they would have by going directly to the capital markets,” Ms Auzanneau adds.
“Government is essentially passing support to the sector. It’s subsidised funding.”
The affordable housing guarantee scheme has evolved
Since it launched in 2021 with a £3bn allocation, the Affordable Homes Guarantee Scheme has doubled in size and evolved in purpose.
Originally all funding had to support new build, a requirement that quickly clashed with reality. As registered providers faced rising pressures from building safety remediation, decarbonisation, disrepair and stock condition, capital increasingly flowed into existing homes as well as development.
Today, the scheme allows both, with a minimum delivery obligation. Any borrower must undertake to deliver new affordable homes equivalent to at least 50% of the amount they’ve borrowed. Those homes must be for social rent, affordable rent or affordable homeownership.
“A lot of applications come in with 50:50 splits,” says Ms Auzanneau. “But we’re seeing an increasing number with higher allocations to new build, which is encouraging.”
Demand from social landlords has risen sharply
In the past 12 months, Venn has provided £1.4bn in facilities to registered providers. Around half of the £6bn scheme is now allocated.
Earlier on, though, the pace was slower. “The original structure didn’t work as well as it needed to,” says Ms Auzanneau. “The relaxation of covenants and expansion of scope was a real catalyst.”
Who can borrow
Eligible borrowers are private registered providers (RPs), which include not-for-profit housing associations and for-profit private RPs. Venn has not yet lent to for-profit RPs, which Ms Auzanneau attributes to scale rather than exclusion: “They simply weren’t at the right scale but we can see this changing.”
She adds that the borrower base has widened since the start of the programme: “We’ve supported organisations without top regulatory gradings, London providers dealing with fire safety and a broader range of structures than we could before.”
Click here to read the full, extended interview with Ms Auzanneau on Inside Housing Living.
Sign up to Inside Housing’s Development and Finance newsletter
Sign up to Inside Housing’s weekly Development and Finance newsletter, featuring a round-up of business, development and regeneration news and analysis.
Click here to register and receive the Development and Finance newsletter straight to your inbox.
And subscribe to Inside Housing by clicking here.
Already have an account? Click here to manage your newsletters.
Related stories
