£45m deal clears path for first Welsh transfer

A £45m deal has been signed that paves the way for Wales' first stock transfer.

The transfer of Bridgend council's 6500 homes will be funded by Nationwide and Principality building societies. Principality is the only Welsh social housing lender and this is its first stock transfer. Nationwide, on the other hand, is the UK's top social housing lender, with £3.6bn in loans to housing associations.

The council's stock will transfer to a new housing association, Valleys to Coast, on 8 September. Valleys to Coast's chief executive Peter Cahill, said the loan and legal agreement would not be official until the date of transfer.

Principality will fund £10m of the deal, while Nationwide is putting in the remaining £35m.

Because of the need for regeneration, parts of Bridgend also qualify for funding from the European Investment Bank. This means the two funders could obtain up to £10m of the £45m loan sum from the EIB.

Mark Webster, Nationwide's controller of housing finance, said: "We have been able to offer this through our relationship with the European Investment Bank. The limit is down to agreement between us, the housing association and the EIB and depends on the number of projects the association is doing that qualify for EIB money."

The Bridgend transfer is likely to be the first of many in Wales as councils try to find the £2.9bn needed to meet the housing quality standard, the Welsh equivalent of England's decent homes standard. Wrexham council will ballot its tenants in February. Rhondda Cynon Taf and Swansea councils are also seriously considering transfer.

Howard John, director of the Welsh Federation of Housing Associations, said: "Every local authority is exploring stock transfer options because the Welsh Assembly has ruled out arm's-length management organisations."

Welsh councils can also ask the assembly for prudential borrowing powers.