Following a full public procurement, the Scottish Government has awarded a charitable bond programme delivery contract to Allia, a social investment charity.
Allia will offer charitable bonds through 2017 providing medium-term loans for registered social landlords, including £25m in 2015 and 2016.
Following successful bond issues of £10m in 2013/14 and £2m in 2014/15 – also in partnership with Allia – a full investment programme has been launched to finance the construction of affordable housing units in Scotland.
Loans for affordable housing are available from Allia for five or ten years with the rate fixed for the whole of the term, giving RSLs certainty of their financial commitment. Interest will roll up and be payable only at the end of the loan. The loans will be unsecured, typically with no covenants for gearing or interest cover.
The loan fund will run in parallel with a new programme to use the interest generated by the loans to provide charitable donations for social housing development. Borrowers who have been approved by Allia can apply to the Scottish Government for a charitable donation in addition to the loan.
Housing Minister Margaret Burgess said:
“The Scottish Government has been adapting to changes in our funding for several years now, and we’ve responded creatively, making innovative use of loans, guarantees, and other financial mechanisms to squeeze the greatest value from our budgets.
“One example of this is our charitable bond investment programme. We’ve already invested £12m in bonds – £10m in loan financing for new affordable housing, £1.5m for regeneration charities, and half a million for new social housing.
“We have another £25m to invest this financial year. This will release at least £18m in affordable housing loans for Scottish RSLs, and up to £7m in charitable donations for them to build new social housing.”
Tim Jones, Allia Chief Executive said:
“Allia is very pleased to be supporting the Scottish Government in its ambition to encourage the building of affordable homes in Scotland through further investments in our charitable bonds.
“The provision of unsecured loan finance together with new grant funding will be of great benefit to a wide range of Scottish housing associations.”
Contact: Iain V Monk at the Scottish Government on 0131 244 2972 or 07771 555 601
Claire Thwaites at Allia on 07740 406365