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Scottish social housing capital market investment grows by more than 40%
Total investment from capital markets in the Scottish social housing sector increased by more than 40% last year, accounting for 20% of all funds available.
According to the Scottish Housing Regulator’s annual report on social landlords’ loan portfolios, total investment in the sector reached £6.2bn in 2019/20, of which £1.2bn came from the capital markets.
The amount available from the capital markets increased by 38% from £0.87bn in 2018/19 and marks a huge increase from five years ago when there was no investment from the capital markets in the Scottish social housing sector.
Three new capital market investors entered the Scottish social housing sector last year: Sun Life, Pension Insurance Corporation and Scottish Widows.
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Meanwhile, the demand for environmental, social and corporate governance investments has the potential to further increase the range of lenders and investors in the sector, the regulator said.
Overall, registered social landlords (RSLs) raised £802m of new loans from banks and capital markets during 2019/20, down 12% from £912m in 2019.
Nearly two-thirds (63%) was used to fund affordable housing development and investment in existing properties, while 2% was used for refinancing and 12% for other purposes.
Shaun Keenan, assistant director of financial regulation at the Scottish Housing Regulator, said: “RSLs require competitively priced funding to continue to develop and invest in housing in Scotland.
“Our recent discussions with lenders and investors indicate that their appetite to invest in the sector remains strong and this is confirmed by our latest analysis.”
“Last year, total investment continued to increase and reached £6.2bn. With around £1bn of undrawn facilities and healthy cash balances, the sector is well placed to deal with the immediate financial challenges of COVID-19.
“Given these challenges, it is important that RSLs have an effective approach to treasury management, not only to ensure compliance with regulatory requirements but also to deliver best value for their tenants and residents.”
