Working with a fund investing institutional and private equity funds the sector can now access funding to build new homes or re-finance existing portfolios that has the following attributes and benefits:
1. Low cost i.e. less than 5% p.a. and in some cases significantly lower than this
2. Long term i.e. typically 25 – 40 years but even up to 160 years if required. At the end of that period the LA/RP will own the properties.
3. Repayments need not be tied to RPI or CPI. A tie to RPI/CPI will produce a lower rate to begin with but no tie is required. The choice lies with the RP/LA
4. A range of potential leases are available that will enable those organisations that wish to, to hold the properties on their balance sheets and those that do not wish to, to not have to.
5. Leases worded so that they will not trigger a re-pricing of existing loans. Much here will depend on the specific conditions that are written into the specific/unique banking covenants that a RP/LA will have. However, the range of potential leases allows as much flexibility here as possible
6. The lease allows for under-performing houses to be sold and replaced with others delivering viable rents if this becomes necessary
7. Shared ownership housing can be included
8. A not for profit SPV is formed and each organisation that takes advantage of the fund is a director of that organisation. This SPV will deliver further surpluses and the directors of the SPV decide how these surpluses are to be used and can be used e.g. to build a community centre.
9. A lease payment is fixed before financial close and this does not rise even if rents received do unless a link to RPI/CPI is chosen by the RP/LA
10. The fund provides the development funding as well as long term funding
11. All rental tenures are allowed as long as they can support the income stream required by the fund.
12. The fund can support a single project or a programme of projects over time
13. The land owner can take a revenue or capital receipt.
14. The only security needed is the new homes themselves, there is no need to take a further charge on other assets
15. The fund can be used to re-finance existing portfolios (assuming HCA permission is given)
16. Funding based on the value of the income stream – not the capital value of the houses
17. Viable schemes will include the costs of housing management, repairs and maintenance and major repairs
Please contact me on firstname.lastname@example.org to discuss how it might work for you