Wrekin’s £225m deal to save £3.5m interest and fund 3000-home renewal plan

Wrekin Housing Trust will save the money over 25 years through reduced interest payments on its new loan with Nationwide, Royal Bank of Scotland, Abbey and Britannia.

The deal – refinancing of £196m of loans and £29m in new money – will help to buy about 3000 new properties to replace 2000 old ones being sold off over 10 years as part of Wrekin’s renewal strategy.

The old homes are either too expensive to bring up to the decent homes standard or have high re-let costs. The trust has been spending £35,000 a year over 10 years to meet the decent homes standard by 2010.

Francis Best, Wrekin’s finance director, said he was not including the savings from lower interest rates in the sum to be spent on the renewal strategy at present.

He added that the strategy would itself save still more money by reducing the trust’s maintenance costs: “The biggest test will be the stock condition survey in four to five years. Hopefully we will see a reduction in end costs.”

The deal – refinancing of £196m of loans and £29m in new money – will help to buy about 3000 new homes

He said the loan had flexible terms so the trust could change the number of homes it sells or buys under the renewal strategy.

The trust’s original loan included £30m from Barclays. This will be split evenly between Abbey and Nationwide in the new deal. Britannia will maintain its £40m stake, Abbey has an additional £40m on top of the £15m it put in to replace the Barclays loan, Nationwide maintains its original £50m and puts in an extra £15m to replace Barclays’ lending, and Royal Bank of Scotland has £65m made up of its original £36m and an extra £29m.

Trevor Foster of Royal Bank of Scotland said: “The executive team has established an asset-management strategy that is creative and will provide substantial benefits to both existing and new tenants."