RSLs in USA and Europe tap more private money

International credit rating agency Standard & Poor’s compared the financing and credit worthiness of social housing in the two regions in its study, A Global Analysis of Social Housing.

It concluded that social housing providers were now more likely to turn to bank loans and the capital markets for funding. In some countries, including Canada and Sweden, that trend was driven by a drop in government subsidy.

The study found that in the USA municipally owned public housing was now tapping the bond markets in order to fund refurbishment, whereas in the past this had largely been the preserve of privately owned affordable housing.

Bond market funding is more common in the USA, while bank loans are more popular in the UK. But Standard & Poor’s said the UK was likely to make greater use of bonds in future.

Dimitri Popov, an analyst at Standard & Poor’s, said future trends could include securitisations and unsecured lending to housing associations based on their credit rating rather than on collateral.

He said: “There’s a lot in the USA we could benefit from over here in terms of tax credits for investors and tax breaks such as exempt bond financing. A lot of this could be repeated here in a different way.”

Standard & Poor’s provides ratings for organisations worldwide, and these act as a guide for investors, particularly in the capital markets.