A UK Treasury guarantee for a £80 million loan to finance a new development of 3,000 homes in Aberdeen was announced by the Chief Secretary to the Treasury, Danny Alexander, today.
The new homes will be built by the Stewart Milne Group as the Countesswells development on greenfield land in, Aberdeen.
In addition to 3,000 homes, of which 750 will be affordable, the entire development will also contain the infrastructure needed to support new residents, including education, parks, leisure and healthcare facilities. The development will be phased over 15 years, with a total expected capital value of approximately £700 million, boosting the local economy and supporting up to 1,000 jobs.
To begin construction on the site the developer has secured a £80 million loan from the Bank of Scotland. The UK Treasury guarantee applies to this loan and has been crucial to getting this project started. In keeping with the industry’s usual approach, the remainder of the development will be financed from revenues from housing sales.
Danny Alexander said:
“The Countesswells Development will create 3,000 new homes which is fantastic news for thousands of families across Aberdeen and Scotland’s economy more generally.
“This is an excellent example of using the strength of the UK’s balance sheet and hard-won credit rating to guarantee and support infrastructure projects across the country”.
Glenn Allison, CEO, Stewart Milne Group said:
“We are delighted that through HM Treasury, we have been successful in securing a guarantee to assist in the delivery of Countesswells. It is a critical project for the city over the next 15 years, delivering much needed homes and community facilities that in turn will support Aberdeen’s economic growth”.
This is the latest project to be supported by the UK Guarantees scheme where the UK government has already acted as a guarantor on over £1 billion of debt to help infrastructure projects raise finance.
Housing is one of the sectors that are eligible for UK guarantees, which can cover both social and economic infrastructure.
The Countesswells Development is currently going through the planning process and is expected to reach financial close by the end of September with construction due to start later this year and first homes due in Spring 2015.