Three HAs receive split of £250m through government’s Affordable Homes Guarantee Scheme

Plans for the £3bn AHGS were first announced in 2019 by then-chancellor Philip Hammond after his predecessor George Osborne scrapped government guarantees for housing association borrowing. At the time Mr Hammond said that it would support the delivery of around 30,000 new homes.

Since then a number of landlords have used the scheme, although last summer it emerged that ARA Venn had softened its covenant ask of borrowers in response to feedback from the market. 

Oriane Auzanneau, managing director and deputy portfolio manager for the AHGS at ARA Venn, said the latest deal was a “very attractive proposition” from an investor’s perspective and for borrowers in terms of the pricing. 

She added: “We continue to see very good demand and a good level of interaction with the sector.”

Softening covenant requirements

On the softening of covenant requirements, Ms Auzanneau said there has been “really positive feedback” on the back of the change.

She said that many organisations have said this has been a “critical change in the scheme” for them to engage with ARA Venn whether they are currently applying or looking to apply in the future.

Ms Auzanneau added: “What we are seeing is organisations not only facing the challenge of having to factor in additional spend into their business plans, but having to do so in the context of higher interest rates as well. 

“So for them being able to have that flexibility on capital spending profile from that covenant in a piece of long-term funding is really important.”

Responses from the borrowers

Peter Fieldsend, chief financial and commercial officer at 39,600-home Torus, said: “We are very pleased to be involved in the AHGS and to achieve a good outcome which fits within our business plan parameters. This now gives us the funding for the development of much needed new affordable homes across our communities."

Anne Costain, chief financial officer at 34,500-home Stonewater, said: “We are pleased to have been part of this funding round, achieving a good result in an uncertain market.”

Nathan Mallows, director of finance, people and change at Coastline Housing, which manages 5,000 homes, added: “ARA Venn has done an excellent job of aggregating a benchmark bond issue and the long-term interest stability helps reduce risk for us.”