A wide shot of a red brick semi-detached house.

How bridging finance can support the UK’s ESG targets: social housing.

25 Oct 2022 | 5 min

Paula Purdy, Together’s Head of Intermediary Sales for Commercial Finance – North.


“With such a wide variety of uses, bridging has fast become a vital source of funding for property professionals; its speed and flexibility offers these borrowers the support they need to seize opportunities and grow their businesses. But bridging finance has another vital role to play.

“Britain is currently experiencing a housing crisis. And we know there’s a real demand to accelerate the delivery of affordable homes.

“In its latest study into the UK’s ‘broken’ housing system, the charity Shelter announced that despite this huge demand, only 6,644 social rent homes were delivered last year - a decrease of 85% from a decade ago. Moreover, there is a particular lack of social and secure housing for those in real need; those with high dependency care, the homeless, elderly and vulnerable, as well as NHS key workers.

“As property finance specialists, our responsibility is clear. In this blog, we explore how bridging finance can be used to tackle the government’s housing targets and support communities across the UK, by helping to deliver homes that transform people’s lives today whilst meeting the needs of the future. And why, for social landlords and housing providers, we’re making access to vital funding as straightforward as possible – enabling more projects to get off the ground and continue into completion.

“I’ve invited Alex Bodie who heads up our Social Housing program to explain the challenges facing this underserved sector and how, in working together to plug the financial gaps for those developing safe and affordable homes, lenders and intermediaries can make a tangible difference.”



Social housing: what do brokers need to know?

Social housing plays a major role in giving security to millions across the UK. It’s a term given to safe accommodation, provided at affordable rates, to people with low incomes or those with particular care needs.

Social housing properties are usually owned or leased by local councils, or one of the 1400 housing associations known as Registered Providers (RP’s). The majority of these are not for profit, however there are over 60 for profit RP’s who have been involved in the sector since 2008. On top of this there are huge numbers of private landlords who now lease their properties to RP’s, charities or Community Interest Companies locally to provide much needed housing to those most vulnerable in their local areas.

It’s important to note that social housing serves more than the ‘social’ element of ESG. In fact, environmental sustainability is a huge consideration for many social housing providers, as homes must be of good long-term quality, energy efficient and have a low EPC rating to ensure comfort and affordability for tenants. And in terms of Governance, the Regulator of Social Housing has a very important part to play and holds significant power (rightly so) to ensure providers are compliant and have the tenant’s best interests at the forefront.


Alex Bodie, Head of Social Housing at Together.

“Currently the level of housing need stands at around 145,000 affordable homes per year, although only 52,000 were delivered in 2020/21. There are around 1.2 million households waiting for such housing, and the shortfall between supply and demand is only increasing.

“I expect that as the cost of living crisis continues and more low-income households are affected, this shortfall will become even wider over the coming years.

“The British Property Federation (BPF) estimates that in order to meet this demand, £34 billion in additional capital is required. This is where for-profit housing organisations can help and add huge value to a sector that is crying out for investment. Their emergence has raised some eyebrows, but the cost of housing they offer to the tenant or owner is no more than that provided by non-profit housing associations, and their addition to the sector can only help in the supply of new affordable homes for rent and sale.

“With the right finance, they are able to scale up quickly, relieving pressure on the not-for-profit sector while still facing the same rigorous scrutiny from the Social Housing Regulation watchdog.

“But finance isn’t always so readily available – especially for smaller providers.”

How could bridging finance help to plug the gap?

“Where government funding isn’t available, privately secured finance offers a way for developers and landlords to purchase land or properties suitable for refurbishment or change of use. Once any works have been completed, they can refinance onto a term loan before leasing the property to supported housing providers or housing associations. Of course, they could also sell the property and exit the bridging loan.

“After proving their ability to create good quality housing schemes, these small-to-medium providers may be able to refinance with or secure investment/government finance for future projects.

“Social housing developments can also run into many of the same challenges as other property projects, for which bridging finance may offer the solution. For example, many developers have experienced severe project delays, material and labour shortages, and bridging finance to exit more-expensive development loans has proven particularly popular where additional time is needed to finish the project off or sell the assets.

“We are very much of the opinion that anything worth doing is worth doing right, so working with a lender who understands this approach and the complexities and timescales associated with each step is crucial.

“As an experienced lender established in 1974, we’ve been providing specialist bridging finance to developers and landlords for many years, and this includes social housing providers. In response to the current crisis, we’ve spent the last few years researching and working closely with the Regulator of Social Housing to develop a new, unique proposition for this underserved sector.

“By doing our due diligence, we’re able to offer the same level of understanding and expertise as we offer for all other property transactions, and can deliver the same levels of certainty around speed, service and transparency.”

How we helped one of our customers support 18 local authorities in delivering social housing.

“We recently partnered with HSPG, one of the UK’s leading social impact real estate firms, to deliver 592 units of low-level supported housing.

“The landmark deal – HSPG’s largest single investment to date of over £70million – will see the firm work with six housing providers across 18 local authorities in delivering this vital accommodation.

“With all 592 properties to be delivered with a minimum EPC score of C within the next 12 months, this transaction forms part of HSPG’s commitment to delivering Supported Housing which is sustainable. Considering the UK’s built environment is responsible for 25% of the UK’s total greenhouse gas emissions, the provision of this sustainable housing is vital.

“Guy Horne, CEO and co-founder at HSPG, said: “We are delighted to announce the completion of this deal which represents our largest single investment yet. With households currently facing significant financial instability at the very same moment house prices continue to rise, the need for supported housing has never been more pressing. This deal will go a long way towards achieving our ultimate goal of helping to solve the UK’s homelessness crisis and ensuring the most vulnerable members of our society have access to a home.”

Paula Purdy continues:

“Whether you have clients who require finance to start a project or complete one, our specialist underwriters and intermediary team will work closely with you or your packager to understand their circumstances and make a common-sense lending decision.

“If you’re keen to learn more about social housing finance, whether bridging or a term product, we’re here to help. Just get in touch our experienced team or watch our Q&A videos produced with Alex Bodie.”


Get in touch Watch the Q&A


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