The Homes and Communities Agency has called for clarity over how social landlords can use the £10 billion of government guarantees announced last week.
The social housing regulator is concerned that some housing associations are mistakenly planning to use the government’s commitment to underwrite borrowing to fund existing development plans or refinance more expensive debt already on their books.
HCA sources have said the regulator is worried that landlords may wait for the guarantees to be available before raising money for development programmes that are already in place.
Providers have been left confused by the scope of the guarantees since they were unveiled last Thursday as part the coalition’s housing stimulus package.
‘There’s been a press release but nothing beyond that,’ said a source at one housing association.
‘We have only become aware over the last few days that the guarantee might be restricted to the new funding arrangement,’ said Matthew Harrison, development director at Great Places Housing Group.
The Communities and Local Government department has so far been unable or unwilling to clarify the position. But the guarantees, along with £300 million in new capital funding, are understood to be ring-fenced for the building of up to 15,000 new homes in addition to any existing development programmes.
An HCA spokesperson said: ‘Providers should ensure that they continue to have the necessary finance in place to deliver their existing programmes and we will look closely at any provider with less than 12 months facilities.’
The guarantees can also be accessed by developers building new homes for the private rented sector.
Guarantees could reduce the price at which housing associations can raise money on the capital markets.
Great Places, which manages 15,000 homes, is expected to launch its own bond in the coming months. Mr Harrison confirmed the plan was still in place despite the guarantee. Midland Heart has this week issued a £150 million bond.