First transfer RSL to get gap funding borrows £62m

The first stock transfer association to receive gap funding from the ODPM has agreed a £62m loan with Lloyds TSB.

Lincolnshire-based Shoreline Housing Partnership has signed up for £40m of debt finance and a £22m revolving credit facility, which allows the association to borrow, repay and re-borrow money over a 30-year period. This is cheaper than a new loan.

North-east Lincolnshire council transferred its 8353 homes to Shoreline on 21 March (HT 24 March, page 8). The association received £17m of gap funding from the ODPM for a negative-value stock transfer – where the cost of upgrading the homes is more than the stock’s value.

Lloyds was involved in negotiations with the ODPM and Shoreline because the loan was dependent on the association receiving the gap funding.

Shoreline will not use the Lloyds loan immediately because it will receive the first year’s gap funding upfront.

The gap funding and the loan will be used to bring the homes – situated in Grimsby, Cleethorpes, Immingham and surrounding areas – up to the decent homes standard.

Work will include re-roofing and improvements to security, as well as the refurbishment of kitchens, bathrooms, doors and windows. Shoreline will also demolish about 200 homes.

Tony Bramley, chief executive of Shoreline, said: “We were involved in three-way discussions with Lloyds and the ODPM about how to integrate the loan agreement with the gap funding and the business plan. Lloyds’ main interest was securing their funding into the incoming stream.”

Satish Lakhani, lending manager at Lloyds, said: “Close consultation and agreement with the ODPM was a particular feature of the deal – all stakeholders were working to the same agenda and the outcome is an innovative financing arrangement to upgrade homes.”

Shoreline has pledged to spend £156m on its improvement and repairs programme over the next 10 years.

Preston council was awarded gap funding totalling £31.3m by the ODPM last week, but the stock transfer of its 7000 homes will not take place until autumn this year.