ART Homes Ltd (AHL) was set up in 2000, by the Aston Reinvestment Trust (the pioneering Birmingham based Community Development Finance Institution), with support from Birmingham City Council and private sector funding. This followed research subsequently published under the title “Stopping the Rot”, which highlighted gaps in the market for the provision of affordable finance to low-income homeowners for the maintenance and repair of their properties, with the consequent implications for neighbourhood regeneration in difficult areas.
AHL’s aim was to provide affordable loans for home maintenance and repair to owners unable to access finance in the usual way from Banks and Building Societies and where grant aid was not available. Such loans are judged to be uneconomic by mainstream institutions, but the AHL Homes model aimed to mix public subsidy and private funding to provide affordable loan and equity release products.
The social and strategic housing potential of this was considered significant and in line with Government policy and proposed legislative changes that were to be made by the Regulatory Reform (Housing Assistance) Order. This was issued in July 2002 and gives Local Authorities greater flexibility and new general powers to intervene in the private sector housing market. The use of Special Purpose Vehicles, and in particular, AHL, is endorsed and supported in Government guidance.
Subsequently, through research, product development and extensive consultation, a particular need and demand has been identified for new products for owners who cannot afford to make any regular payments but who may be able to release equity. Also, this type of product has been identified as having considerable potential to help facilitate clearance and regeneration through support for relocation.
The significant increase in demand and growth potential stimulated by the requirements of the RRO and the new Property Appreciation Loan developed by AHL, necessitated a review of the organisational structure and governance arrangements. Aston Reinvestment Trust and AHL agreed that a new arrangement would be more appropriate to support and underpin the next stage of development and growth.
In 2003 the ownership of AHL was transferred to Mercian Housing Association as a wholly owned subsidiary within a group structure arrangement. Mercian saw the opportunity to integrate AHL with their existing services to develop and offer a comprehensive package of cross tenure housing solutions.
The first major loan fund was established in October 2003 with a £1m contribution to a Property Appreciation Loan fund from Birmingham City Council.
AHL now has loan schemes in operation with 14 Local Authorities. Eight in the West Midlands, three in the North West of England, one in Scotland and one in South Wales.