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EIB gives approval to stalled £100m housing association loan
The European Investment Bank (EIB) has given board approval to a £100m loan to an English housing association, marking a movement in £1bn of stalled finance for UK housing associations agreed by the bank.
Stonewater is one of a number of housing associations seeking to complete loans with the EIB, in a process that has slowed significantly since the UK voted to leave the EU.
The bank, which is a not-for-profit investment arm owned by the European Union, has said it will honour all its existing commitments, despite the vote to leave.
However, these deals – which include offers of finance to some of the largest housing associations in the country – need to be appraised, with this process dragging out as the Brexit deal is thrashed out between UK and EU officials.
Stonewater had lobbied the UK government to intervene to help it get its deal across the line and the loan, which is set to finance improvements to existing stock and the building of new homes, has now been approved by the bank.
The 32,000-home housing association, which operates across England, said it hopes the deal will now be complete by the end of the financial year.
John Bruton, executive director of finance at Stonewater, said: “[I am] pleased that we have been able to continue to progress this loan as it would be a very beneficial component to the funding of our strategic ambition to increase the number of new homes we build for those in need.
“Both the EIB and Stonewater would like to complete the loan documentation by 31 March, so that’s what we are working to achieve.”
The EIB has approved finance for Family Mosaic and Peabody, which have since merged into a single housing association, and Notting Hill and Genesis, which have also merged.
The ‘approval’ brings Stonewater’s deal to the same stage as the Peabody and Notting Hill Genesis finance.
Wheatley Group, based in Scotland, got its £185m loan from the EIB over the line in July last year – the only deal to be finalised since the vote to leave.
Stonewater, which is one of Homes England’s ‘strategic partners’, aims to deliver 4,850 new affordable homes over the four-year period starting March 2019.
The EIB has provided more than £4bn to UK social housing and urban renewal schemes in the past decade, mainly through debt aggregator The Housing Finance Corporation (THFC).
Before the referendum, it proved the cheapest source of finance to UK housing associations – with funds available at lower rates than government borrowing through the THFC programme.
The EIB is not expected to offer new deals to housing associations once the UK leaves the EU at anything like the scale it does currently.
