Expert Support For Your Long-Term Asset Strategy

Rethinking Finance: Sustainable Funding Strategies for Social Housing

This masterclass takes an honest look at that question. Not in theory, but in practice, drawing on monitored data from live programmes, design experience across thousands of properties, and front-line delivery at scale.

In partnership with

Back to all masterclasses

Arun Poobalasingam, Chief Partnerships Officer at The Housing Finance Corporation (THFC), led a masterclass on balancing borrowing and financial sustainability in social housing. The session highlighted the need for finance and sustainability teams to collaborate, ensuring funding is effectively managed for development and retrofit projects.

Key Financial Challenges

1. Rising Interest Rates – Borrowing costs have increased from 2-3% to 5-6%.

2. Debt Affordability – Lenders impose financial covenants, limiting borrowing capacity.

3. Strained Balance Sheets – Associations must balance borrowing against long-term stability.

Funding Options Overview

1. Bank Loans

· Flexible but short-term (5-10 years) with strict financial covenants.

2. Capital Markets & Bonds

· Long-term, fixed-rate funding, but requires large issuances (£100m+).

3. Aggregator Funding (e.g., THFC)

· Bond market access without large issuances, though with management fees.

4. Government-Backed Loans

· Lower costs via government guarantees but with added compliance.

5. Equity Partnerships

· Allows private sector investment but raises governance concerns.

Beyond Traditional Borrowing

Arun stressed that borrowing alone cannot bridge the funding gap. Alternative solutions, such as energy savings mechanisms and data-driven lending criteria, could improve financial sustainability. While sustainability-linked loans currently offer minimal cost benefits, better data-sharing (e.g., Live Data Trust Project) may drive future cost reductions.

Takeaways for Housing Providers

1. Manage Debt Responsibly – Consider long-term financial health.

2. Understand Financial Covenants – Borrowing terms impact future capacity.

3. Explore Alternative Models – Consider equity, energy savings, and other mechanisms.

4. Align Finance & Sustainability – Collaboration is crucial for securing funding.

With a strategic, informed approach, housing associations can secure sustainable financing while continuing to provide safe, energy-efficient homes for residents.