Sovereign has signed a GBP 150m funding deal with the European Investment Bank (EIB) to support its plans to build 4 500 new homes over the next three years.
Sovereign, the sixth largest housing association in the country with over 56 000 homes, will be able to draw on the funding to support its 1 500 homes-a-year development programme.
The EIB, which is owned by the European Union, has provided more than GBP 4bn of investment in social housing and urban renewal across the UK in the last decade, more than to any other European country, mainly through The Housing Finance Corporation.
However, this is the first deal directly between the EIB and housing association in England to complete since 2014.
Mark Hattersley, Chief Financial Officer at Sovereign, said: “We’re committed to making the most of our financial capacity to invest in building much-needed affordable homes to rent and buy across the south and south west.”
“This funding from the EIB, loaned at sector leading rates, will also help us improve the energy efficiency of our existing homes, in addition to providing those affordable places to live.”
On Monday 13 February EIB Vice-President Jonathan Taylor visited Sovereign in Newbury, Berkshire, to see some of the sites that may benefit from the funding.
The investment will also enable new affordable homes, both for rent and shared ownership, to be built at sites which could include:
- Newbury Racecourse, Newbury
- May Street, Basingstoke
- Emersons Green, Bristol
- Draycott Road, Abingdon
- Strete Mount, Christchurch
Some of the funding will also be used to improve the energy efficiency of Sovereign’s existing homes, including replacement doors and windows and enhanced insulation.
“New investment in social housing is crucial to increase the number of affordable homes and cut heating bills in existing properties. The European Investment Bank supports social housing investment with leading housing associations across Europe and is pleased to back transformational investment by Sovereign, one of the largest housing associations in the country,” said Jonathan Taylor.
“This week’s visit to Newbury provides a valuable opportunity to see how upgrading existing properties and the construction of new social housing will improve lives, create jobs, benefit local suppliers and cut heating bills in homes for hundreds of families across southern England.”
Financial advisors JCRA, initiated discussions with EIB, highlighting the lending needs of the sector. They then introduced Sovereign to the bank and assisted them throughout the lending process, from taking them through the due diligence to arranging and negotiating the facility agreement.
Duncan Salter, Director at JCRA, said: “JCRA is delighted to have assisted Sovereign with this new financing. Due to its low cost, EIB funding is incredibly attractive to housing associations who are seeking to build social housing, and manage the requirements of a changing government agenda.”
“As the first bilateral deal to be completed since 2014, this facility will save Sovereign millions in financing costs, paving the way for more social housing development where it is needed most.”
The EIB lent GBP 5.5bn to support long-term investment in 36 projects across the UK last year. This represented the second largest annual engagement since the start of EIB lending in the UK in 1973.
