At the very time when Swindon Council is carrying out an ‘options appraisal’ to consider transferring our housing stock to a Housing Association, Housing Associations are in difficulty owing to the ‘credit crunch’.
Labour Research reports that many of the country’s biggest banks are making it difficult for Housing Associations to access credit, with some industry executives warning that “some failing housing associations may even have to be nationalised.”
The seven lenders to the industry, including RBS (70% owned by the government) and Lloyds (43% owned by the government) have been accused of taking any chance to reprice existing loans to HA’s which could maintain ‘social housing’.
Tom Dacey, Chair of the G15 Group of big London based HA’s warned:
“If nothing changes, our sector is going to be devastated and nobody is going to build social housing.”
One HA executive said an RBS banker had told him that bank was “looking for any opportunity to raise existing interest rates.” RBS did not confirm or deny the claim but Mark Amis, head of social housing at Lloyds, admitted banks would look to reprice loans wherever possible.
“Industry insiders” told LR that they are worried about banks hindering the traditional rescue model for the sector, where larger organisations take over smaller struggling ones to protect tenants. Some in the industry have warned that if failed organisations were allowed to go under, the government could be forced to mount a bail-out, which could see parts of the sector re-nationalised.
David Orr, Chief Executive of the National Housing Federation, which represents the HA’s said:
“If we are not able to continue arranging rescues with the sector, there may have to be a government bail-out of a smaller association. That would be a guarantee and would effectively put the whole sector in the hands of the government.”
The government is in talks with the industry to ensure that it can continue to provide social housing and one option may be to put pressure on part-nationalised banks to open credit lines. The Treasury may be reluctant to do this as it has promised not to get involved in the day to day management of state controlled banks.