£200m sustainable finance deal to tackle the affordable housing crisis
Regional housing association Bromford has agreed to a new sustainable finance deal with NatWest, to continue its focus on developing affordable and energy-efficient homes.
The £200m loan will be used to build 1,300 affordable homes across the West Midlands and the West of England to add to its portfolio of 50,000 homes. It’s fueling ambitions to have built 11,000 homes by 2032 with 65% at social and affordable rent tenures.
Bromford could receive £1m of interest savings if it meets the targets on delivering new social rented homes and reducing Scope 1, 2 and 3 carbon emissions.
Over the past year, Bromford has secured more than £650m of sustainable finance to deliver the objectives set out in its Sustainable Finance Framework, from the delivery of new, affordable, more energy-efficient homes to coaching more customers into employment and training and reducing the organisation’s gender pay gap.
The group, which would be known as Bromford Flagship, says it will be able to release significant additional financial capacity over and above what either party could achieve alone. This increased capacity would allow Bromford Flagship to deliver 2,000 homes each year for the next 30 years, and provide 50% of these homes at social rent.
Bromford’s Director of Treasury Imran Mubeen, said: “NatWest have been one of our key strategic funding partners for several years. The speed and focus with which we have closed this deal is a testimony to our relationship and underlines the ongoing importance of bank lending in our sector.
“We had considered a return to the capital markets this year, but we continue to refresh and optimise our new funding strategy in view of prevailing market conditions. This deal enables us to benefit from the prevailing arbitrage between the SONIA swap and gilt curve to generate significant interest savings over the life of the loan. Ultimately, this means we can invest even more in our communities and customers.”
Amanda Swann, Director of Development at Bromford said: “We exist to provide safe, affordable homes to people who are unable to access them through the market. With demand for affordable housing showing no signs of decreasing, we are committed to playing our part in tackling the housing crisis by continuing to build affordable homes. Our track record over the past few years demonstrates this commitment, especially around building homes for social rent which accounted for nearly half of all the homes we built last year. This loan from NatWest will allow us to continue our development programme to meet our ambition of building 11,000 new homes by 2032 with 65% at social and affordable rent tenures.”
Imran added: “Our shared vision with NatWest regarding sustainable finance created the first green loan in the sector in 2019 which focused on improving the energy efficiency of our homes and has helped to enable our decarbonisation journey with 89% of our homes now at EPC C or above.
“This new deal captures our sustainability ambitions for a new era, as we continue to expand our new homes programme with a focus on social rented homes, and as we extend the focus of our carbon journey beyond EPC ratings to focus on our Scope 1, 2 and 3 carbon emissions. Importantly, the loan has the potential to generate over £1 million of interest savings if we successfully meet our sustainability targets which may challenge even the most sceptical of juries to reconsider the financial and broader benefits of sustainability-linked loans.”
Paul Eyre, Head of Residential and Housing Finance at NatWest Group said: “Our funding support to Bromford forms part of our ongoing commitment to supporting the social housing sector and its delivery of affordable, safe and energy efficient homes.
“We announced an ambition earlier this year to provide £5bn of funding commitments to the social housing sector to December 2025. This additional funding brings our progress against this to £1.7bn. We are proud to help Bromford continue its great work of further investment in new affordable homes in the West Midlands and West of England.”
Legal advice was provided by Devonshires, Clarke Willmott and Trowers & Hamlins acting on behalf of Bromford and Addleshaw Goddard LLP acting on behalf of NatWest.
