Inexpensive borrowing powers are being utilised by a Cheshire council in order to provide housing associations, amounting to £50m in loans. That could lead to a number of new home extensions in Cheshire.
Warrington Council came to a £30m agreement which sees Muir Group Housing Association benefit from a commercial loan. It will evaluate a proposal in July that would see Plus Dane Group offered a £20m loan.
The authority has granted loans to housing associations for three years in order to stimulate Cheshire housing development, after a lengthy finance withdrawal by banks after the economic crisis in 2008. So far, using its low-cost borrowing courtesy of the Public Works Loan Board, £51.8m in loans has been dealt out to four different providers.
The council stands to gain approximately £15,000 in interest alone every year for each £1m borrowed.
Muir Group chief executive, John Bellis, said that it had never had the opportunity in over 25 years to use a council loan facility:
“We see this as a useful supplement to our other sources of funding and it may be something other councils could replicate.”
Plus Danes is hopeful of completing a council loan for £20m in July, which it would use to finance development plans in the Warrington area. The landlord, owner of 18,000 homes, has further secured a contract from another provider, which it aims to use to offer development agency services for the building of Warrington council services. It is also helping with a proposal worth £10 for approximately 110 new cost-effective eco-homes on multiple sites.