First affordable homes guarantee deal expected
Housing minister Kris Hopkins is expected to announce the first deal under a £3.5 billion government guarantee scheme to lower the cost of development finance.
It is anticipated the announcement about the affordable homes guarantee programme will be made following today’s autumn statement.
Under the scheme, administered by a subsidiary of The Housing Finance Corporation, social landlords will raise money cheaply for new developments from a group bond backed by government guarantees.
Experts expect borrowing costs to be around 0.4 to 0.5 per cent higher than the price of government bonds including an administration fee, although some thought it could be 0.6 to 0.7 per cent.
Henrietta Podd, head of debt advice and origination at advisors Canaccord Genuity, said this was lower than the 1 per cent to 1.15 per cent above the cost of government debt that a medium-size organisation could expect to pay to raise £100 million to £150 million on its own.
She said whether the properties could only be valued at their existing use value as social housing would be key as this might value them lower than other methods.
Phil Jenkins, partner at consultancy Centrus Advisors, said he expected the scheme to ‘be pretty well subscribed’.
