The provision of private finance for social housing: An outline of recent developments in funding existing housing associations in England

Abstract

With successive Housing Acts in 1985 and 1988 the British government declared its intention to create an environment for the integration of social housing and private finance. This paper draws on empirical research to consider the success to date this policy initiative from the perspective of financial institutions. This research concentrated on attitudes to the availability and suitability of financial instruments for social housing funding for existing housing associations in England. After an introduction clarifying the framework in which funds are raised, the first substantive section provides an overview of the characteristics of the potential lenders to social housing in England and of the regulatory environment affecting their lending policies. Section 3 outlines the main uses to which funds are put and the types of financial instrument currently available to housing associations. The paper next examines the scope for increasing the supply of these funds through wholesale markets, particularly via The Housing Finance Corporation. One attempt to expand the supply of finance to existing associations through ‘credit enhanced’ funds is then described. The paper concludes by evaluating progress so far and by questioning the degree to which social housing will have to change if private finance is increasingly to replace public sector funds.