A credit rating agency has warned that the government must do more to make private finance initiative effective in social housing.

A report from agency Standard & Poor’s, published on Monday, said pressure to meet the decent homes standard, combined with £1.6bn of government investment in PFIs over the next three years, meant the schemes should gain momentum.

However, it warned that the process was currently being choked by red tape.

“To date, the very long approval process for the pathfinder projects in UK housing PFIs has nearly stagnated the market,” it said.

The study’s authors urged government to change legislation and regulation of PFIs to speed up the process.

It said both lenders and the sector needed a greater understanding of how housing PFIs work.

“Without achieving this, private and public interest in the sector may dissipate, and the sector will continue to struggle, limiting funding options for local authorities,” it warned.

Housing PFIs were an investment opportunity for the capital markets if properly understood, the agency said. It provides ratings to organisations such as housing associations to help investors decide where to put their money.

Source

Housing Today