04/04/2025

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Government announces boost to funding for the housing sector to deliver 18,000 social rented and affordable homes

The UK government announced last week £2bn of new funding to build 18,000 new social and affordable homes, as part of its wider housing and growth strategy. This funding is part of the government's "Plan for Change," aiming to deliver 1.5 million homes. The investment announced is focused on fast-tracking development on ready sites in cities like Manchester and Liverpool, with construction of thousands of new homes to start by March 2027 and be completed by June 2029. The Government has announced that the funding will “be made available to providers on the same terms as the Affordable Homes Programme for 2021-26”. The announcement states that this funding will act as a bridge to a future grant programme to be announced at the much anticipated Spending Review in June 2025.

The government has confirmed it will prioritise homes for social rent to address housing shortages, especially for lower-income families. It is part of a much needed and broader effort to boost job creation in the construction sector, training 60,000 workers. Key stakeholders, including housing associations and industry leaders, have expressed strong support for the plan, highlighting its potential to drive economic growth and address homelessness. 

If you would like to discuss further, please contact Katie Dyer.

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Tri Fire EWS1s – emerging solutions for RP borrowers and funders

One of the current challenges widely discussed at the recent NHF Housing Finance Conference was the consequential impact on loan security valuations and asset cover ratios resulting from the now discredited EWS1 certificates issued by Tri Fire’s Adam Kiziak to Registered Provider (RP) borrowers, notably a number of G15 associations. We know that hundreds of EWS1 certificates have been assessed by Tri Fire, although the extent of fraudulent certificates and underlying malpractice is not yet fully known, hence the understandable caution by lenders in understanding the emerging risk and ramifications. The sector has moved quickly to tackle the issue. Whilst valuation and funding requirements on the issue are not crystallised with absolute certainty and there is still some investigation required to understand the implications for those RPs affected, the bottom line from hearing from various valuers and funders is that EWS1s issued by Tri Fire are unlikely to be relied on by valuers and lenders for the purposes of new charging in the absence of strong supporting evidence of building safety compliance. 

This therefore leaves RPs asking what the position is with their currently charged security signed off by Tri Fire and what their options are going forwards.  

The first step is to talk to your funders and valuers and provide as much granular information as possible to determine how many units are affected, how many units are in charge and with which lenders. Working backwards, a nil valuation could be applied given the negative impact on the marketability of such units. However, this is not necessarily a terminal diagnosis and could potentially be viewed as more of an interim “withholding of value” until satisfactory evidence of compliance can be produced in the form of a new replacement certificate, although the shortage of fire engineers in the market may mean a delay.  A nil valuation may not necessarily be an issue for RPs with sufficient headroom within over secured facilities, although this may be materially adverse in terms of the impact on asset cover ratios and compliance with loan covenants in a counter scenario. In some circumstances where there is a proportionately small number of units affected within a facility, it may also be possible to persuade an amenable funder to accept the current security valuation and wait for the existing EWS1 to be replaced given the certificates expire after a period of 5 years.  In a more critical scenario where a borrower RP risks being in breach of its loan covenants, a funder may accept substitute security but this may have a transactional cost with new due diligence and certificates of title required. It is therefore important affected RPs are “security ready” with quick access to clean substitute security to cater for curveballs in the form of Tri Fire. As ever, early engagement and having open conversations is key, especially where RPs have a revaluation on the horizon including security assessed by Tri Fire. The positive news is that there is discernible focus amongst sector stakeholders on finding a range of flexible solutions to address this issue.

If your organisation is affected by this issue and you would like to discuss further, please contact Jess Church or Katie Dyer.

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Key themes from NHF Liverpool 19-20 March 2025

Bevan Brittan were proud sponsors of the NHF Housing Finance Conference 2025 in Liverpool and, despite geopolitical headwinds blowing a gale, there was an overall sense of positivity at the conference this year and a focus on finding solutions through collaboration, innovation and an acceptance that uncertainty is the new norm. The key themes discussed were as follows:

  • A call for a rent settlement to give RPs certainty over rental income and clarity on the government’s housing strategy in the long term. The hotly anticipated Comprehensive Spending Review (CSR) to be announced in June is tipped to address both of these issues to provide the sector with the long term stability it needs to deliver on its targets.
  • The need for an increase in AHP grant funding to help to deliver the government’s target of £1.5 million homes by 2030. A question posed was “is the current funding model broken” The consensus in response was that short term, incremental change is not sufficient to address the affordable housing shortage and comprehensive structural reforms are required to make a change and escalate growth, including a significant upscaling of government grant to the sector to alleviate the stark choice many RPs face in terms of delivering new housing and maintaining and improving existing stock. The £2 billion cash injection announced by the government this week will be very welcome but more grant funding is needed.
  • Planning reform to enable much needed housing to be built in the right places where the need is greatest to stimulate growth and address the housing crisis according to regional need.
  • Collaboration and innovation – the debt model is seen as the core mechanism to leverage funding in the sector but collaboration with the private sector, local authorities and cohesive partnerships with the right stakeholders are viewed as a catalyst to unlock investment and to create new funding models to upscale delivery. 
  • RPs are facing an enormous retrofit bill with no return on capital investment and the maths does not compute. Innovative ideas are required to service the funding needed to pay for retrofit and the journey to EPC C or higher by 2030.
  • Data and knowing your stock to take advantage of opportunities in the market and produce cross organisational efficiencies.
  • Optimising the value of existing security by implementing rolling charging programmes to capitalise on the value of assets and be “security ready” to take advantage of funding opportunities in the market. It is equally important to have security capacity available to deal with market fluctuations and curveballs presented by the likes of Tri Fire where RPs could suddenly potentially face a loss of stock value and a breach of asset cover covenants. RPs have made great strides in recent years but there is more work to be done to unlock the value of existing and new build pipelines – and to be prepared for unforeseen eventualities.
  • Investment in skills, training and people to bridge the skills gap and upscale the manpower and expertise to deliver a shortfall of 4.2 million homes in the UK.

Liverpool NHF Conference in Focus – Portfolio disposals, equity investment and the role of For Profit Registered Providers (FPRPs)

There were some interesting views shared at the panel session on portfolio disposals, equity investment and the role of For Profit Registered Providers (FPRPs). The no default record of the sector remains attractive to investors and the sector continues to view equity investment as a means to close the sector’s funding gap. In the panel session, chaired by Savills, Catherine Raynsford (MD Major Stock Acquisitions at LGAH) was very clear that investment via FPRPs can be a great way for RPs to obtain a capital receipt to either invest in existing stock or new build.  She was keen to point out that it is not just outright sales with a management agreement to enable the original RP to manage the stock but if joint venture companies are set up the RP still retains partial ownership in the stock as well as the management role.  

Mark Washer (Chief Executive of Sovereign Network Group) at a Key Note session commented that owning the properties may no longer be a priority however, Kate Henderson Chief Executive of the National Housing Federation can’t see how RPs not owning properties “stacks up”.

Back in January it was reported that the Regulator had warned that it will continue to monitor the financial viability of landlords that are relying on selling stock to help their cash flow.

The reality is that a number of large (and small) RPs are looking to dispose of stock either to other traditional RPs or to FPRPs/Investors.  There are numerous models of future ownership that can be considered by RP boards to enable strong corporate structures to be in place with the necessary governance protections to ultimately provide a capital receipt to an RP – either to improve the homes of existing residents or build desperately needed new social housing.  RPs need to ensure they have carried out careful and considered options appraisals before disposing of stock and such appraisals should also consider the type of buyer who may be interested in the stock along with the corporate nature of the disposal.  RPs are likely to be able to get comfortable with a decision to dispose where there is a clear and balanced case for a disposal, residents are protected and either existing stock is improved or additional higher quality stock is built.

The important thing for a disposing RP is to ensure that the future of the social housing they have potentially built and managed over many years remains a secure home for their residents and the services residents receive are of a high standard.

If you are considering buying or selling a portfolio of properties please do get in touch with our Portfolio expert Rebecca Gibson or Katie Dyer our Social Housing Finance expert, who are more than happy to have an initial chat to discuss options that may be open to your organisation.

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National Wealth Fund: A cornerstone in the housing retrofit finance puzzle?

As part of the chancellor’s Autumn budget, Rachel Reeves announcements included the re-branding of UKIB into the new National Wealth Fund and the increase in its budget to £27.8bn in an effort to “catalyse private funding” and “create the conditions that businesses need to invest”. 

Central to this announcement was confirmation that NWF would provide guarantees linked to debt of up to £1.15bn in partnership with Barclays, Lloyds and THFC for social housing retrofit projects. 

On 1st April NatWest become the fourth lender to partner up with the NWF to guarantee up to a further £500m in unsecured medium to long term debt aimed at retrofitting social housing stock in the UK. Full details of the Natwest scheme are yet to be published.

A summary of the current headline terms of each of the lenders offerings is set out in the table below: 

  LLOYDS BARCLAYS THFC NatWest
Fund Contribution  £500m  £500m £150m £500m
Security All unsecured 
(unencumbered asset test)		 10 year unsecured 
OR
15 years with option for unsecured in first 5 years		 Secured (general corporate facility) 
  AND
Unsecured (NWF facility) - second ranking charge taken over the above		 Unsecured (full terms tbc)
Min Borrow £15m+ £10-50m

£6-100m 

(Requirement for BOTH a 50% corporate facility and a 50% NWF facility)

TBC
Duration Shorter (5 years + 1) Medium (10-15 years) Medium (15-17 years) Medium to Long
Availability Min 9 months of completion
Max 4 years		 Within 5 years TBC TBC
Repayment Bullet Bullet Bullet TBC
Use of Proceeds Eligible Projects:
Lloyds Sustainable Finance Framework*		 Eligible Projects:
Barclays Sustainable Finance Framework**		 NWF Facility: Eligible Projects 
(relevant framework tbc)		 TBC
Works Quality Certification Independent e.g. PAS2035, TrustMark Independent e.g. PAS2035, TrustMark
(exceptions for own workforce)		 TBC TBC
Reporting Self via Green Loan Compliance Certificate Self via Green Loan Compliance Certificate Annual Sustainability Report 
AND
Retrofit Works Report for NWF facility		 TBC

* Sustainable Financing Framework - 2023
** Barclays Sustainable Finance Framework Version 4.1

The unsecured nature and availability of project types under the relevant SFF’s will likely make these products cheaper and faster to set-up and deploy. Self-certification is also a welcome step in the right direction to tackle unwieldy reporting covenants in standard lending. However, the extent to which the terms of the new lending will be appropriate and attractive to the range of RPs looking to tackle retrofit in different shapes and sizes across the country remains to be tested. What is clear is that sustainability linked housing retrofit finance is high up on the agenda for both government and lenders in recognition that further measures are needed to help solve the funding conundrum.

The questions these new products raise for many RPs will be:

  • What are my retrofit priorities and when is the best time to start tackling them?
  • Can these priorities be met by undertaking measures covered by NWF backed debt?
  • Are we set up to consistently deliver and meet the related reporting requirements?
  • How do we finance (and where relevant secure) the repayment of the additional debt?
  • What other funding options are available to supplement a NWF backed loan?

Please contact Louise Leaver or David Moore if you would like to discuss the financing of housing retrofit or the development of a sustainable housing finance framework.

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Commonhold Reform Update for Affordable Housing Providers

The UK government published a Commonhold White Paper on 3 March 2025 which aims to phase out leasehold in favour of commonhold, a more practical form of homeownership. The reforms propose a shift that could benefit developers, lenders, and residents, however there is potential for it to impact affordable housing providers and their funders. Moving away from leasehold tenure that has been in existence since the Middle Ages will be a challenge. Key areas of concern for housing associations include financing, managing mixed-tenure developments, and converting existing leaseholds to commonhold. In addition there are many stakeholders that will need to support the conversion and ensure the knowledge, skills and resourcing are in place to ensure that its reintroduction is a success. The reforms, if done well have the potential to increase market confidence, assist with housing association asset management and support the government’s goal of delivering 1.5 million homes.

For more details on what this means for affordable housing providers and the potential benefits of commonhold please do get in touch with Katie Dyer and Rebecca Gibson.

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JLL and Bevan Brittan joint Housing Finance Seminars Recap: Key Takeaways

In February and March, the BB Housing Finance team had the pleasure of touring the UK with Richard Petty and Marcus Dixon from Jones Lang LaSalle (JLL). This seminar tour featured several prominent speakers, including Catherine Raynsford from Legal & General Affordable Homes, Nicki Buckley from MSV Housing and Gows Shugumaran and Imran Mubeen from Newbridge Advisors.

The seminars were designed to tackle the pressing issues in the housing finance sector as we look toward 2025, focusing on funding, valuation, charging challenges, and the opportunities ahead.

Seminar Highlights and Key Discussion Points

One of the primary topics was how to achieve the government’s ambitious target of delivering 1.5 million homes. The discussion highlighted the role of equity investment in meeting this goal. However, there are several challenges in the housing sector that could impede progress. Funding constraints and the increasing pressure from retrofitting older housing stock were noted as major obstacles. Nevertheless, the emphasis was placed on capitalisation and equity investment as potential solutions to unlock new avenues of funding for housing development.

Legal Updates & Sector Challenges

Another focal point of the seminars was the challenging legal landscape for housing providers at the moment. We provided an overview on the most recent and imminent legislative changes that are expected to impact the sector. For those looking for a deeper dive into the legal aspects, a series of more comprehensive seminars is scheduled for June, where attendees will be able to explore these changes in greater detail.

Funding Trends & Market Insights

With access to the capital markets being more challenging at the moment, the seminars delved into the funding obstacles and potential solutions for RPs. Many RPs are expected to need alternative sources of funding over the next 12 to 18 months. The sessions highlighted key trends, such as the increased focus on joint ventures, the National Wealth Fund retrofitting solutions (more on that in this snapshot) and sustainability-linked funding products. There was also discussion around new funding documentation requirements, including provisions for valuer rotation, pensions and insurance, which are becoming increasingly important as the market evolves.

Charging & Valuation Trends

The charging strategies discussed emphasised the importance of starting the property charging process early. This ensures both stock readiness and valuation certainty, which are critical for future planning and development and accessing funding when the opportunity arises. Common challenges related to property valuation were addressed, with suggestions for streamlining charging processes and optimising internal structures to accelerate progress.

Economic & Political Landscape

We also received updates on the broader economic and political context impacting the housing sector. Insights into inflation rates, predicted GDP growth, and the global and political uncertainties that are currently affecting the UK economy were provided. The housing market itself continues to be influenced by these macroeconomic factors, with house prices exceeding forecasts, although rental growth has shown signs of slowing. Additionally, JLL highlighted how MV-STT valuations were holding up more as against EUV-SH valuations and also that there was a noticeable contrast in the performance between house and flat sales, with rising concerns around fire safety, service charges, and rental markets.

Future Outlook & Sector Challenges

Looking ahead, we reported how the outlook for the housing sector remains uncertain. Global and political instability and ongoing legislative changes add layers of complexity to the housing market. Economic conditions, along with the government’s expectations for housing delivery, are among the key challenges that will shape the future of the sector. However the recent government announcements for housing look increasingly positive and could change the earlier housing sector outlook – subject to the announcements in the Comprehensive Spending Review later this year.

Stock rationalisation and the latest updates on Section 106 deals suggest that the market remains more difficult to navigate than in previous years – with many more housing associations wanting to sell stock than there are buyers and buyers being more discerning around the stock they want to acquire.

Missed the Seminars? Get in Touch!

If you were unable to attend the seminars or would like to delve deeper into any of the topics discussed, please feel free to reach out to Katie Dyer or Louise Leaver. We’re happy to share the seminar slides and have further discussions to help you better understand the key takeaways and explore the issues in more detail.

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EPCs in the social housing sector update

The social housing sector is already well aware of its decarbonisation responsibilities but RPs need to consider the implications of the inclusion of social housing properties in the Minimum Energy Efficiency Standards (MEES). 

  • Current Exclusions: Social housing properties are currently exempt from MEES but many do have such information through their Energy Performance Certificates (EPC)
  • Impending Changes: The government plans to introduce higher energy efficiency standards for social housing through the Decent Homes Standard. A review of the Decent Homes Standard has been awaited by the sector for a while and the Ministerial Foreword of Improving the energy performance of privately rented homes: 2025 update - GOV.UK (the Consultation) says that the government will carry out such a review “in due course”.
  • Private Rented Sector: MEES updates are being proposed for the private rented sector through the Consultation, with compliance deadlines of 2028 for new tenancies and 2030 for all tenancies.
  • Challenges for Social Housing: RPs will face financial and resource challenges to meet these new standards while managing other priorities. However, funders are still keen to support RPs with Lloyds and Barclays getting financial guarantees from the government’s National Wealth Fund to support the retrofitting of social housing the in UK.
  • Potential impact on rents: There is a query over the change in the metrics and content of an EPC and whether these will need to be reviewed and updated throughout the duration of a tenancy and if, in turn, this could lead to RPs charging higher rents for properties with better EPC ratings. There have been calls for energy efficiency to be factored in to the social rent formula with reduced rents for tenants with higher energy bills, while those in more energy-efficient properties would pay a bit more rent (“warm rents”) in recompense for lower energy bills thus providing a fairer deal for tenants
  • Effects on valuations: will the properties that don’t meet the required energy rating be valued lower in a securitisation exercise?

Ultimately MEES will be introduced into the social housing sector but as to when and how this remains uncertain.

For more information, get in touch with Rebecca Gibson.

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Security Charging Update – Indemnity insurance and unadopted roads

In the security charging world, it is always a good time to consider best practice and how we can tie up loose ends and finalise matters that are still outstanding since a development has completed to avoid any delays caused to future charging transactions. In this edition, we will be looking at the issues relating to procuring indemnity insurance and also unadopted roads.

Indemnity insurance

As lenders have become generally more risk averse in the housing market, RP borrowers should be aware that lenders are requesting indemnity insurance policies more frequently and to factor this in to budgets and timescales. The cost of paying for indemnity insurance premiums is a security risk to consider and please do check your development records as it is often the case that an indemnity policy may have been obtained at acquisition stage which has been forgotten about and you don’t want to be paying an insurance premium twice. Additionally, funders are taking a more forensic approach to terms and conditions of both existing and new policies and are requesting a number of amendments, which can also have timescale implications and it is therefore worth future proofing policies to anticipate charging. When acting for RP borrowers, the strategy we strongly encourage to avoid the need to negotiate and place indemnity policies to satisfy lending requirements  is to implement  thorough security due diligence well in advance of transactional timescales. This approach can assist to identify and resolve security defects and avoid the need for insurance at all but we appreciate that, for a variety of reasons, this is not always possible.

Whilst borrower RPs will be relying on their lawyers to negotiate new policies and endorsements to existing policies, here are some of the key clauses for Development and Treasury teams to review carefully so that there is a clear understanding of what will satisfy lending requirements and to minimise costs and negotiation time: 

  • The Insured Use – is this correct and does the policy cover the correct risks
  • Definition of Insured – is this correct and wide enough to cover all required parties for any funding transaction
  • Confidentiality provisions which may need to be adhered to 
  • Please notify your lawyers if you have had any correspondence with the beneficiaries of the risks to be insured against, especially recent correspondence, as there is a risk that a policy could be invalidated by tipping off. 
  • The level of indemnity must be at the right level to satisfy the funder’s requirements and the agreed valuation basis.
  • Be vigilant as to potential breaches of use class as insurers will take a view as to whether they insure against these based on how recent the breach is. Also rectification of these breaches such as applying for certificates of lawfulness will inevitably invalidate any insurance given as doing so will involve notifying the council of the potential breach.
  • Indemnity insurance for outstanding planning discharges can be obtained but it will be determined by the age of the build and the condition/planning obligation so it is preferable where possible to obtain discharges and planning obligation sign-offs prior to transaction stage and communicate with development departments to ensure these are all recorded and easily accessible. Insurance to cover outstanding contamination conditions and failed environmental searches can be expensive.

If you would like to discuss further, please contact Rubyn Campbell, Theresa Ferguson or Jess Church.

Unadopted Roads

Often roads remain unadopted for many years despite the necessary S38 or S278 Agreement being entered into. Once these Agreements have been completed (especially where there is a surety or bond in place), it is often considered that this element has been dealt with. However it is necessary to ensure that roads actually get adopted to ensure a smooth charging transaction as well as for the obvious benefits!  If some years have passed since the S38/278 Agreements have completed, but the road has not actually been adopted a lender will want to know why. A Certificate of Title will need to include some mitigating statements confirming what stage of the adoption process the road is at, that the Property has the necessary rights, that the road is still in good condition and the reason for the delay in achieving adoption. 

The longer the time period between the agreements being entered into and the road not yet being adopted, the more lender queries will be raised regarding i) whether further works will be required before adoption can take place; ii) who is presently carrying out the maintenance to the roadway; iii) why has there been delay in the road being adopted and whether this could have cost implications for a lender; iv) how many schemes in the portfolio are affected by unadopted roads.  A lender will be considering the risk and potential liability if an enforcement situation occurs so harnessing this information as part of your pre charging strategy will reduce the number of queries raised at transactional stage.

If you would like to discuss further, please contact Rubyn Campbell, Theresa Ferguson or Jess Church.

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Co-operative and Community Benefit Societies Act Law Commission Review

For our earlier coverage, please see our Company Secretary Snapshot from February. 

The Law Commission is reviewing the Co-operative and Community Benefit Societies Act 2014. The proposed changes have implications for RPs who are constituted as Community Benefit Societies (CBS). The key issues below may have an impact from a funding perspective. The Law Commission has now issued a provisional policy position, alleviating some of the concerns which originally arose from this far-reaching proposal.

Membership 

The proposal to move to a “one member one vote” model has been withdrawn. Most CBS RPs maintain closed memberships, so this is good news for the housing sector. 

Exempt Charity Status

The original proposal to remove exempt charity status has been withdrawn insofar as it relates to RPs. This is also a welcome decision.

Financial Regulation 

There is a proposal to introduce interest rate caps for CBS investments and borrowing. A cap on interest rates could constrain RPs’ ability to attract investors and lenders. Rising interest rates have already heightened the cost of borrowing, and statutory restrictions may force CBS RPs to renegotiate existing financing agreements or seek less favourable terms, reducing their financial resilience and increasing risk of default. 

The NHF Model Rules adopted by most CBS RPs require Boards to determine whether an interest rate is reasonable when making a decision to proceed with a loan. A statutory restriction could fetter their ability to manage their businesses. RPs would have to confirm that funding is “necessary”, but who would decide? Often, prudent treasury strategy includes to fund when market conditions are favourable. This may not comply with the new proposal. Most RPs borrow fixed and floating rate debt, and the interest rate will change over time. Any determination as to reasonableness must apply at the date of the initial funding only. 
There are already appropriate regulatory and legal measures in place to manage and protect the social housing assets of RPs. The new proposals potentially undermine those protections, which may ultimately increase the cost of borrowing.

The Law Commission has not yet released its final position on any of the above but it is likely that the policy position will be implemented. There may be further changes when the final proposals are issued.

For more information, get in touch with Anna Clark. 

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AOB

Forthcoming events

Senior Independent Director Network – 6 May – Virtual 

Is your SID part of our network? If not, please email Rose Klemperer for more information.  

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Housing Company Secretaries Update

In the rapidly evolving landscape of UK housing, it is essential for Company Secretaries to stay ahead of governance issues and hot topics.

WATCH RECORDING

Upcoming conferences

We will be attending these upcoming conferences, get in touch if you are attending. 

  • Housing Brighton 2025 – 7th-8th May
  • UKREiiF – 20th – 22nd May 2025
  • Housing 2025 – 24th-26th June

Other articles that may be of interest

Katie Dyer
Jessica Church
Rebecca Gibson (1)
Louise Leaver
David Moore
Rubyn Campbell
Theresa Ferguson
Anna Clark

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