Charitable bond funding for affordable homes increased to £40m
In an effort to help deliver its affordable housing target, the Scottish Government has increased its budget for investment in charitable bonds in this next financial year to £40 million.
The additional investment for 2019/20 is expected to generate £10m of donations, with the grant donations created by the programme so far having already provided funding for over 250 homes for social rent.
Providing unsecured loans for up to 15 years with no payments of interest or capital before maturity, the charitable bonds programme was created in response to demand from housing associations for better access to appropriate finance.
Making the announcement, housing minister Kevin Stewart said: “The government’s innovative use of charitable bonds is making a real contribution to the delivery of our target to deliver 50,000 affordable homes by March 2021. The interest on these loans enables us to create a grant fund to support the development of social rented homes in communities across Scotland.
“To date, the government has invested £115m in the charitable bonds programme which will provide development finance for over 1,000 affordable homes.”
Wheatley Group is the UK’s biggest developer of homes for social rent. It has completed over 2300 new homes since April 2015 and has plans in place which will take the total number built between 2015 and 2025 to 7500.
Wheatley Group chief executive, Martin Armstrong, said: “We are delighted to have received £16m of investment through the Allia charitable bond scheme. This helps us progress our plans for hundreds of new affordable homes in and around Edinburgh as part of our wider new-build programme in support of the Scottish Government’s More Homes Scotland agenda.”
Allia Impact Finance undertook its first charitable bond with the Scottish Government in 2014, and in 2017 successfully tendered to manage the bonds until 2021.
Daniel Carrico, head of origination at Allia Impact Finance, said: “We’re delighted to secure another £40m into our charitable bond programme, building on the success since it started over four years ago. We look forward to working with more housing associations and supporting them with this unique source of unsecured finance.”
Dunedin Canmore is close to completing 20 flats for social rent at the Wisp in Edinburgh and plans to use charitable bond loan finance to build a further 34 homes there. Dunedin Canmore’s 20 homes at the Wisp have been built by Springfield Properties. They are part of a wider masterplan for the area which will provide a mix of affordable housing and homes for private sale.