3 loans and counting…

Norwich Housing Society has had three loans from Charity Bank and may soon be taking out a fourth. We spoke to CEO John Newstead about the housing provider’s relationship with Charity Bank.

Your latest loan is for £355,000. What have you spent the money on?

We’ve acquired 14 one-bedroom retirement flats. We got a very good deal on the properties – £100,000 per flat so £1.4 million altogether. They’re brand-new, fully accessible, and have solar panels, water-efficient sanitaryware and so on. They’re also in Eaton, which is one of the nicest areas of Norwich, but people over 60 in housing need will be able to rent one of the flats for between £99 and £104 a week. Market rent in the area is around double that. We’re the only social housing provider that just serves the city council area of Norwich, and we always have a healthy waiting list.

How did you raise the rest of the money to buy the flats?

We had nine one-bed flats that were going to need a lot of money to bring up to the new building standards. So, we rehomed the tenants and sold the flats to help finance this new development. We also got a grant from the local authority for 40% of the purchase price.

We were awarded the grant before the loan was agreed, but we couldn’t have gone ahead with the project without a loan. And if we hadn’t been able to proceed, we wouldn’t have been able to keep the grant money.

What made you come back to Charity Bank for this new loan?

We have three key lending partners. Charity Bank offered us the best rate for this particular project.

How did you find the process of getting the loan?

Since I’ve been here, I’ve been involved in getting two other loans, and I would say Charity Bank’s process was the smoothest and most straightforward. The information required is fairly standard – audited management accounts, cash flow forecasts and so on.

The biggest piece of work is going through the loan agreement, which is quite extensive as the bank needs to cover every eventuality. So going through that with the solicitors and checking everything is relevant and appropriate to our organisation does take time. But I wouldn’t say it’s particularly complicated.

How would you describe your relationship with Charity Bank?

Excellent. The communication is very good; they’re very responsive, very proactive. And that’s everyone from the Director of Lending, Carolyn Simms, through to the staff I worked with to get the loan authorised. I’ve mainly dealt with two key people, Wesley Lovett and Stacey Goodrich. I had more contact with Wesley to begin with, but then Stacey took us through the loan agreement and everything that was needed to get the loan approved.

It all worked very well. Wesley came down at the end of August and had a chat with the staff. Carolyn has visited us before as well.

Presumably, the rental income from the new flats will more than cover the loan repayments?

Yes. We’ll be getting around £75,000 a year in rent. Thanks to the grant, we only paid £60,000 for each property, so they’ll have paid for themselves in a few years’ time.

We’re actually going to be paying off five of our other loans in February 2025, so in the 25-26 financial year, our cash position will be improved by around £360,000 a year.

Will you use some of that to buy more properties?

Definitely. We’ve already identified a site for redevelopment and are putting in a pre-planning application fairly soon. The plan is to demolish eight of our older properties, which have a large communal garden, and build 22 properties on the site. Doing so will significantly reduce our long-term maintenance liability compared to keeping the older properties, which would need a lot of work to bring up to standard.

The cost of the project will be around £3.3 million. The local authority is going to fund 50% of that, but we’ll need to find the rest. So, I’ll be speaking to Charity Bank about another possible loan soon…

If you need a loan for your social housing project, please visit https://www.charitybank.org/charity-loans