How will regeneration be funded?

May 31, 2017

We are often asked how the regeneration programme will be funded.  While we are committed to community led regeneration, it is also obviously crucial that we can fund the plans we develop.  There is no point designing any scheme if we do not have the money to pay for it.

It is not easy to give any one specific answer:  No two projects are alike, and housing finance is complex.  However, there are a range of possible options that we will be looking at and a number of these are set out below.  We may not end up with just one of these, but opt for a mixture of two or more.  In the end we need to ensure that all schemes we progress are achievable and demonstrate value for money.  

Housing Revenue Account

This is money controlled by the Council which has to be used for the benefit of tenants of Milton Keynes Council.  This can include works to improve or replace social housing.  This may be a useful source of funds for some elements of the programme but it is subject to a number of legal restrictions and the funds available will not be sufficient to do everything that is needed.

Private Finance

In this option, YourMK could ask banks or other financial institutions to lend us the money to pay for a scheme.  We would then pay them back in regular payments.  The money loaned to us would be secured on the land being built on or the ongoing rental income that the new properties would provide.  This would be similar to a landlord mortgage.

Council borrowing

Instead of YourMK going to the banks, the council could borrow the money from the banks or other institutions.  They would then lend it to us at a rate of interest that is beneficial to us but still ensures that they make a surplus.  This would then be repaid to the Council over an agreed period of time.

Institutional investors

These are large organisations who seek to invest money to generate an income.  This is a good option for them at present as interest rates are low and investing in building schemes will give a greater financial return.  It is also less risky than investing in the stock market.  In effect they are  investing to secure a long term income. 

The team at YourMK have extensive experience of assessing and accessing housing finance, and will also bring in other experts as necessary from time to time.  Our overall aim is to make sure that we can deliver the regeneration that is needed, in partnership with communities, at a price that can be afforded and offers good value for everyone involved.