Peterborough RSL signs £111m ‘offset’ loan deal

Peterborough’s new transfer association has signed a £111m loan deal, including social housing’s first offset mortgage and current account package.

The deal, between Cross Keys Homes, Royal Bank of Scotland and Newcastle Building Society, includes the first housing association version of the “offsetting” accounts offered by many high-street lenders. Under the deals, surplus money in the current account is set against mortgage debt and interest is only paid on the net amount.

Julian Foster, Cross Keys’ director of resources, said the offsetting facility would save the association administration time.

He said: “It’s the first time this has been done. It may save £15,000 to £20,000 in managing cash balances and it does save a lot of administration.”

The package also includes a £10m development loan option, which Cross Keys has to decide whether to use within the coming year.

It’s the first time this has been done. It may save £15,000 to £20,000 in managing cash balances

Julian Foster, Cross Keys Homes

The association bought a £3.5m office with land for 50 houses last week and could use the £10m development option to build on the site. The landlord could also cross-subsidise the office purchase and social housebuilding by putting some homes for sale on the site.

Some of the £111m loan will go towards the association’s £90m programme to meet the 2010 decent homes standard.

The association will also spend about £5m on environmental improvements.

Peterborough council transferred its 10,000 homes to Cross Keys earlier this month after 82% of tenants voted in favour of the switch last December.