Registered Providers (RPs) are facing many challenges including high inflation, rental income caps, high borrowing costs, as well as increased maintenance and upgrade costs for legacy housing stock. This has resulted in RP mergers, ‘Financial Viability’ downgrades, greater reliance on debt and consolidation of RP development pipelines through both land and S.106 transactions. Therefore, RPs have welcomed the government’s announcement on 12th February about the expansion of the Affordable Homes Guarantee loan scheme with a £3bn boost for both new build and existing accommodation. This has been driven forward by the Department for Levelling Up, Housing and Communities (DLHC).

WHAT IS THE AFFORDABLE HOMES GUARANTEE SCHEME?

The Affordable Homes Guarantee Scheme opened in 2021, running until April 2024.

The original £3bn available provided low-cost, flexible and long-term loans to RPs to help fund the delivery of new build Social Rent, Affordable Rent or affordable home ownership accommodation only, secured against existing affordable assets with a guarantee from the DLHC.

The scheme is available to all RPs (including ‘for-profit’ RPs and local authorities), including RPs and schemes benefitting from existing affordable housing grant programmes (such as the Affordable Housing Programme 2021-26) and can be used in support of both land-led and S.106 accommodation.

To date, the scheme has assisted twelve RPs deliver 6,290 new homes, with £1bn of the initial £3bn being utilised.

WHAT HAS CHANGED?

As of 12th February 2024, £3bn of additional funding has been made available until April 2026 with the intention to deliver an additional 20,000 homes.

And, for the first time, the scheme can be used to upgrade existing properties, including energy upgrades and building safety works, such as the removal of cladding. At least half of all loans from the scheme must be spent on new build accommodation, while the remainder may be used to upgrade existing properties.

With grant funding spending restricted and not reflective of current market conditions, the additional funding through the Guarantee Scheme will be welcomed by RPs as they continue to seek low-cost sources of funding. For instance, the availability of funds from the Guarantee Scheme to invest in existing housing stock will release RP surpluses to support the delivery of new affordable homes and provide much-needed investment in the housing market.

For further affordable housing advice, please contact one of the team. For Red Book acquisition and disposal valuation advice, contact Henry Collins; for affordable housing agency and S.106 advice, contact Harry Wackett; and for stock transfer / EUV-SH / MV-T advice, contact Chris Ramsden.