TOWN Hall chiefs at Warrington have agreed to make loans of up to £10 million each to two housing associations to boost provision of affordable homes in the borough.
The borough council will borrow the money from the Public Works Loan Board and the two associations – Arena Housing and Warrington Housing – will repay the loans at the PWLB interest rate, plus 1.25 per cent, over a period of 
25 years.
Council chiefs have been told if the loans are not given, Warrington may not be able to meet its target for affordable homes for the period 2008-2013.
Currently there is a shortfall of 171 affordable homes per year for this period compared with one of just 42 per year for the period 2001-2006.
Executive member for housing Coun Bob Barr (right) said: “The financial climate has made it difficult for registered providers of social housing to access funding and while the availability of finance is improving, if the council does not provide loans there is a risk that the targets for the delivery of affordable housing built in the borough won’t be achieved.
“This has an impact not only on the number of affordable homes built in the borough, but also on construction jobs, associated trades and building suppliers.”
The government’s Department for Communities and Local Government has approved Warrington’s proposals – making the council one of the first in the country to raise finance in this way, says Coun Barr.
The council will minimise the risk of the associations failing to repay the loans by arranging for an independent validation of their business plans and placing a registered charge on properties owned by the associations.
2 Comments
That’s also alot of council tax revenue to collect.
Should the council really be borrowing £20 million given their current financial status andthen sub-loaning it to the housing associations who for whatever reason are not able to borrow the money in their own right. I’ts a bit like me borrowing £20k then passing it on to someone who either has a bad credit rating or is not deemed suitable or able to have enough funds to pay pay back the loan so therefore are refused?
The responsibility to repay the £20 million will always be on the heads of the loan taker (ie the council) and although they say they are ‘safeguarding’ any risk of non payment by the housing associations by way of Registered Charging Orders a CO only really stops the ‘owner’ of the property from selling without first paying off any owed amount charged on it.
Maybe they sould just press all the new developers to increase the number of affordable houses on offer through the 106 agreements, that should soon clear the shortfall without the need to borrow 🙂