Securitizing to finance social housing (part II)

Author: | Published: 1 Apr 2005

Readers of IFLR last month will know that there has been little social housing securitization to date in the UK, but the prospects for deals are good. They will also have learned about the administration controversy around social housing providers, which were briefly subject to the risk of being put into administration. What follows is an examination of the securitization structures used in Europe to finance social housing and some reasons, legal and cultural, why UK lenders and borrowers in this sector have been slow to turn to the capital markets in their quest for finance.

Structures

The most common structures for securitization of social housing loans are those where new loans to registered social landlords (RSLs) are made by a special purpose vehicle (SPV), which funds itself through the issuance of highly rated, listed debt in the asset-backed capital markets. A less common alternative is where existing loans are purchased by an SPV from...