Funding deals drop after rent cut announcement
The number and value of institutional funding deals fell dramatically in the year after the rent cut was announced, research by Social Housing shows. However they bounced back the following year when the rent cut was implemented.
There were £4bn of bond issues, including retained bond sales, retail and charity bonds, private placements, and institutional loans, including leasebacks, made in the year before the rent cut was announced in July 2015. In the year after there were £1.5bn of these deals. The figure rose to £2bn in the year after the cut took effect from April 2016.
This was up from £1.4bn in the year prior to the cut – although much of this year covered the same period as the year after the announcement.
The difference between the value of deals done in the year after the announcement (year to July 2016) and before its implementation (year to April 2016) was down to eight deals which took place between May and July 2016.
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The referendum to leave the EU appeared to have had an impact on deals, although it is difficult to disaggregate its effect since the years pre and post referendum and rent cut cover largely the same periods.
There were £1.5bn of deals done in the year before the referendum in June 2016 and £2bn the year after.
Deal volumes dropped in the year after the rent cut announcement compared with the prior year – from 45 to 13 – and in the year pre and post the enactment of the rent cut – from 31 to 17 – even though the value of deals rose in the year after the cut.
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