Barclays ups individual housing association loan limit to 150m

Barclays Bank has increased the amount it will let housing associations borrow by £50m.

The bank upped its limit for an individual association from £100m to £150m several months ago in the wake of the Housing Corporation’s decision to give the bulk of grant to its 70 partner associations.

Many of the partner associations have been borrowing more money to correspond with their increased grant allocations. In addition, the bank’s loan portfolio has grown by £2bn so it can afford to lend associations more.

Dennis Watson, deputy head of the bank’s social housing team, said: “£150m out of a loan book of £3.5bn is a much more acceptable risk than £100m out of a loan book of £1.5bn because it’s a smaller percentage of that whole.”

He continued: “A lot of banks are mindful that if there are 70 preferred status RSLs out there, the likelihood is that grant funding will get more concentrated and, as a consequence, future loan finance required will get more concentrated.”

The bank now has about 10 housing associations with more than £100m in loans.

Watson said the bank could increase its lending limits once again if its loan book reached £5bn or £6bn.

Bob Wilson, head of finance policy at the National Housing Federation, welcomed the news. He said: “It will enable those individual associations and assist the sector in its huge investment programme.”

Other banks are also believed to be raising their lending limits while others, which had no official ceiling, are striking bigger deals that would have been more difficult to do when their loan books were smaller.

Paul French, relationship director at Lloyds TSB, said the bank had never had a loan limit. However, the largest amount it had committed to registered social landlords had gone up from about £50m two years ago to more than £200m now. The bank’s loan book had also grown from about £500m to £1.6bn over the same period, he added.