Landlord funding and finance

Social housing landlords are funded through three main routes; payments by residents, debt financing (loans and bonds) and public funding (grants and benefits).

Your landlord should maintain a long term business plan which outlines their expected income and expenditure and ensures that they comply with the requirements of the Governance and Financial Viability Standard.

In particular they should ensure that:

  • they have access to sufficient cash at all times
  • their surplus funds are invested in a way the delivers value for money whilst minimising risk
  • their financial forecasts are based on appropriate and reasonable assumptions
  • they monitor, report on and comply with their funders' covenants (required conditions applied by lenders)

Capital funding

Social housing landlords can apply for various capital funding programmes to deliver new housing. The Capital Funding Guide (CFG) contains the rules and procedures for all landlords delivering affordable housing through one of Homes England’s affordable homes programmes (separate rules apply in London where programmes are managed by the Greater London Authority).

Capital grant programmes enable the development of:

  • homes for rent
  • shared ownership
  • rent to buy
  • specialist and supported homes
  • social homebuy

In addition to capital funding, your landlord will need to borrow to meet the costs of building new homes. They will need to pay this debt back and meet the interest costs on that borrowing as well as complying with the covenants (required conditions) that the lender applies to them.

Value for money metrics

The Regulator of Social Housing requires that landlords (except local authorities) report on the Value for Money Metrics; these provide a guide to the financial health and activities of your landlord.

  • reinvestment – what proportion of the value of your landlord’s homes and other assets does it invest in building new homes, maintaining existing homes and paying interest
  • new supply – what proportion of its homes were build in the last year
  • gearing – what proportion of the value of your landlord’s homes and other assets is the level of current debt
  • interest cover – what proportion of the profit (surplus) your landlord is making is the interest it must pay
  • headline social housing cost – what is the annual cost per property of your landlord’s service
  • operating margin – what is your landlord’s annual profit (surplus) rate
  • return on capital employed – what is your landlord’s profit (surplus) rate as a proportion of the value of its homes and other assets.

Was this article helpful?