£45 million housing Brummie Bond – that’s just for starters
— LeaderofBirmingham (@BrumLeader) April 26, 2017
When I became the leader of Birmingham City Council I promised to explore radical ways to generate new funding so that we can build the homes Brummies so desperately need.
I’m delighted that the first ‘Brummie Bond’ under my leadership has been sold, raising £45 million that we will be able to use to significantly boost our housing investment plans.
The decision by Phoenix Life to lend to the council through a bond issue represents a major vote of confidence in Birmingham by the private sector.
Phoenix Life, as you might expect, conducted due diligence into the investment, including a credit review, and concluded that Birmingham city council’s finances were sound and that lending money to the council was a good proposition.
Not only will the bond bring much-needed investment to address an acute housing shortage, it will save the council money because we have been able to negotiate an excellent rate of interest.
The interest rate the council will pay to borrow the money, at an average of 2.36%, is lower than that charged by the Public Works Loan Board (PWLB), which means we will pay £1.4 million less over the course of the loan than would have been the case had we borrowed from PWLB.
I’m determined that the Brummie Bonds programme will go from strength to strength.
With our spending plans facing a relentless austerity assault by the Tory Government, this Labour-led council is determined to be more imaginative and identify ways to generate funding to bring jobs and homes to Birmingham.
This council won’t raise the white flag of surrender and we’ve shown that, to make us less reliant on rapidly shrinking Government grants, we’ll go out and bring in millions of pounds that would normally go to London markets.
Typically, this is Birmingham doing what it does best. Buckling down, being pragmatic. Brummies are doing it for themselves.
We must not underestimate the scale of the challenges that lie ahead.
The Birmingham Development Plan makes it clear that some 89,000 new homes will be required for Birmingham citizens by 2031. We estimate there is sufficient space within the city boundary for just 51,000 homes, leaving 38,000 properties to be built in neighbouring local authorities across the city border.
Radical plans to build new homes in Birmingham city centre are taking shape. We expect over the next few years to deliver 10,000 properties at Smithfield, Snow Hill and Curzon Street, an unprecedented rate of growth in city living.
Birmingham city council stands ready to play a leading role through the Birmingham Municipal Housing Trust, which has built over 2,000 new homes for sale or affordable rent since 2009, with plans for up to 500 homes for affordable rent also in place.
During 2015-16, BMHT built 562 new homes in Birmingham. That was 30 per cent of all new homes in the city.