Housing associations will need to borrow more than £20 billion from banks over the next five years to continue to build new homes for those most in need, according to the Tenant Services Authority (TSA).

In its latest report on the sector, the social housing regulator also indicated a continued improvement in the housing and finance market conditions, with the quarterly survey results showing that housing associations have again reduced the backlog of unsold low-cost home ownership (LCHO) properties and are still securing new investment to deliver affordable housing.

As pressure on government capital investment budgets tighten, the need for private finance to be raised at competitive rates remains central to delivering decent homes and new build targets. The TSA Board has approved a new private finance strategy to encourage existing and new banks to lend to housing associations.

-- Advertisement --

The report forecasts that between £20 billion and £25 billion of new funds are required over the next five years for associations to continue to build new homes, improve existing homes, and provide quality services to tenants. The strategy sets out how the TSA will continue to maintain the confidence of the retail lending markets and encourage the expansion of institutional investment in affordable housing. Based on recent market discussions, the TSA believes that the retail market has an appetite to lend £20 billion and that a further £5-10 billion could be raised through the bond markets.

Clare Miller, Executive Director Risk and Assurance, said: "We take our role seriously in encouraging a market place that allows housing associations to build new homes for those who are on social housing waiting lists. We’ve played a crucial role over the past 12 months in being able to give confidence to lenders and investors by ensuring the financial stability of the sector – and will continue to do so.

"Many housing associations believe that the housing and financial markets have improved over the past few months – but they’re expressing cautious optimism. While we’re seeing a continued willingness to lend to the sector, we are not complacent, and we are taking action to ensure that we continue to have an active and competitive private finance market."

(CD/KMcA)