Transfer landlord will fund stock improvements and retain option to borrow more

Erimus Housing, Middlesbrough’s newest housing association, agreed a £105m loan with the Royal Bank of Canada last week.

The association, which took over management of Middlesbrough council’s 12,000 homes last week, is among a handful of stock transfer associations that have secured similar deal terms to those usually offered to traditional housing associations.

Transfer associations must usually put up almost all their homes as security, which leaves little scope for more borrowing during early stages in their development.

Before using loans to fund any activities not outlined in their business plan, they also have to consult their lender.

But Erimus’ deal allows a higher level of debt per home than is common for transfer associations, so the landlord has been able to put up minimum security and keep back homes for collateral on future loans.

Under the deal, Erimus is also not required to consult with the lender before undertaking activities not contained in its business plan.

The loan’s flexibility and the fact that not all collateral is tied up means Erimus can do more regeneration in future

The loan’s flexibility and the fact that not all the collateral is tied up creates potential for Erimus to borrow more money in future to carry out more regeneration projects.

In the past, RBC helped another client, Sunderland Housing Group, to reorganise properties into different bands. This unlocked extra value to be used as collateral on future deals. When it looks to borrow again, Erimus may choose to follow a similar path.

Paul Fiddaman, finance director of Erimus Housing, said: “The efficient use of security and the loan’s flexibility mean that, in future, we will have the capacity to take part in significant regeneration activity in Teesside.”

He confirmed that the loan would be used to improve Erimus’ homes, saying: “It’s about getting our homes up to a quality over and above the decent homes standard.

“The name of the game is to make these properties popular.”

Source

Housing Today

Postscript

Coast & Country Housing, based in Redcar, north Yorkshire, has unveiled a £60m refurbishment package to bring homes in Easton and Grangetown up to the decency standard. The landlord will use part of a £175m loan from Nationwide, Britannia, Royal Bank of Scotland and Halifax Bank of Scotland to fund the works. A £60m portion of the loan was used to buy the homes and the remaining £115m will go into decent homes work across all stock.