How we keep the lights on and the bricks stacking:
- Government grants: These are often provided through programmes like the Affordable Homes Programme in England. The latest Spending Review pledged £39 billion over 10 years to support new social and affordable housing.
- Rental income: Tenants pay rent—usually below market rates—which provides a steady income stream. A long-term rent settlement of CPI + 1% has been introduced to give housing associations financial stability.
- Private finance: We borrow from banks or issue bonds, using their housing stock as collateral. This helps fund large-scale developments and regeneration projects.
- Sales and shared ownership: Sometimes we sell homes or offer shared ownership schemes, where buyers purchase a portion of a property and pay rent on the rest. The proceeds are reinvested into more housing.
- Charitable donations and grants: Foundations like the Greggs Foundation offer community grants to support local initiatives run by housing associations.
- Partnerships and co-investment: Increasingly, we are teaming up with local authorities, developers, and investors to share the cost and risk of new housing projects.
It’s a balancing act—keeping homes affordable while securing enough funding to grow and maintain our stock.
Funding Examples
1. Grant + Private Finance Model
- How it works: Combines government grants from the Affordable Homes Programme with private loans and bond finance.
- Impact: This hybrid model allows them to build thousands of affordable homes while maintaining financial sustainability.
- Notable: Issued a £450 million bond in 2021 to support development plans.
💼 2. Capital Markets & ESG Bonds
- How it works: Raises funds through long-term bonds, including green bonds tied to sustainability goals.
- Impact: Enables large-scale investment in energy-efficient homes and retrofitting existing stock.
- Notable: Issued a £400 million sustainability bond in 2020, attracting strong investor interest.
🌍 3. European Private Placements
- How it works: Diversifies funding by tapping into European capital markets through euro-denominated private placements.
- Impact: Reduces reliance on UK markets and broadens investor base.
- Notable: One of the first UK housing associations to explore this post-Brexit funding route.
🏘️ 4. Cross-Subsidy from Market Sales
- How it works: Profits from market-rate home sales are reinvested into affordable housing development.
- Impact: Helps fund social rent homes without increasing debt.
- Notable: Our development arm builds homes for sale to support their charitable mission.
🤝 5. Joint Ventures & Partnerships
- How it works: Partners with private developers and local authorities to co-fund and co-deliver housing schemes.
- Impact: Shares risk and leverages external expertise.
- Notable: Entered multiple joint ventures to accelerate delivery of mixed-tenure communities.
📊 6. Bond Aggregation via THFC
- How it works: The Housing Finance Corporation (THFC) pools borrowing needs and issues bonds on behalf of multiple associations.
- Impact: Provides access to capital markets for smaller associations at competitive rates.
- Notable: THFC has raised over £7 billion for the sector since its inception.