Dexia and Lloyds are among banks seeking competitive deals as lending periods treble

Banks have developed a “renewed appetite” for lending to social housing sector, according to several leading industry figures.

They point to a marked improvement in lending terms to registered social landlords (RSL) compared with six months ago and say smaller lenders have started showing an interest, too.

Gill Rowley, head of private finance at the Tenant Services Authority, said banks were now providing funding on a 25 to 30 year basis, as opposed to the five to 10 year periods offered earlier in the year. “This has led to an easing of lending margins,” she said.

Richard Williams, a director of consultancy BWNL, which has struck deals of up to £100m for social housing groups over the past year, said nearly all large lenders were offering deals at competitive rates.

Since March, the major guys have returned to the market

Finance director, RSL

Last month, Dexia, a major lender to the sector, notified him that it was on the lookout for deals; its renewed interest follows similar moves by Lloyds Banking Group, RBS and Nationwide.

The finance director of a housing association which owns and manages more than 5,000 units, added: “In March, just Abbey and Barclays were lending. Since then, the major guys have returned. Co-op, Triodos and Allied Irish have started sniffing around the edges.”

While the banks never left the market, they were offering loans at two or three percentage points above the London interbank offered rate (Libor), which brought lending to a standstill. Now, they are offering credit at 1.5-1.75 points above Libor.