Andrew Taylor of Sunderland Housing Group said associations could raise the amount of cash they borrow by getting the best valuations for their properties.
Higher valuations allowed Sunderland to sign a £300m refinancing deal – one of the country's biggest – on 12 September.
The value of its 34,284 homes rose more than £100m because it had them assessed in groups according to condition rather than all together. In a valuation done last year the homes were found to be worth £368m. However, the new method boosted them to £501m on 31 March this year. The 4000 homes set for demolition were taken out of the security valuation. This meant that the lower-value homes did not pull down the worth of the higher value properties.
Taylor said: "It is the first time that property had been valued in this way."
Under the funding deal, Nationwide will provide a loan of £110m and Royal Bank of Canada a loan of £190m. Sunderland cancelled its old £115m loan with Nationwide but kept its £239.5m bond with the Royal Bank of Canada and ABN Amro and £75m of European Investment Bank funding.
The old deal only enabled the group to modernise its homes but now it can built 4000 new homes over the next five years.
The group hired Royal Bank of Canada as funding adviser – an unusual move in a sector that tends to use consultancy firms rather than banks to advise on deals.
The deal comes as the National Housing Federation revealed in its report Balance Sheet Capacity that some associations, especially small ones, have unused borrowing capacity and middle-sized associations will have trouble borrowing in the future (HT 26 September, page 15).
Taylor said valuing property by separating low- and high-cost properties in valuation could generate more borrowing power. He said: "I think there is definitely the capacity. We have proved there is more than is tapped so far. Where is the capacity? Is it in the hands of people who can deliver what is required?"
Source
Housing Today
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