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Work with your lenders

‘Re-pricing’ loans could lead to stand-off between landlords and lenders, says David Levenson

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Re-price. It is a word with unpleasant connotations. Why are the banks apparently rattling the cages of housing associations?

Is the wolf really at the door (‘Banks may re-price landlord debt’, Inside Housing, 25 February)? After all, a contract is a contract, isn’t it?

Some might think banks are looking to associations to pay for their losses. Most finance directors I know are well aware of our lenders’ concerns. We know that ideally they would like to reduce their lending commitments and perhaps start again and we are happy to talk to them about solutions that will work for all sides.

In our experience, lenders have been reasonable about agreeing to revise terms which do not affect them commercially.

Financing needs change and so do markets. Between the European exchange rate mechanism crisis of 1992 and the start of the 2008 credit crunch, rates and margins fell steadily. Housing associations experienced benign conditions.

Times have changed radically and we are under no illusions about the future. Existing loan agreements may contain booby traps, which could be triggered by the new investment regime, or the International Financial Reporting Standards when they go live for associations in 2014/15.

Lenders are allegedly lying in wait until they can re-price or call in their loans. Left to their own devices, associations and banks may have to deal with conflicting and, in some cases, irreconcilable priorities. This can only result in excessive caution on the part of providers and an inexorable rise in unmet need. Government, landlords and banks need to get together round the table to make sure affordable housing supply doesn’t dry up completely.

David Levenson is group finance director of Network Housing Group

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