A Cambridgeshire building company has been forced to extend repayment of a multi-million-pound loan from the Cambridgeshire and Peterborough Combined Authority (CAPCA) to build 27 homes in Cambridge.
Laragh Homes and Houghton Homes own Histon Road Development LLP and borrowed £9.637m over 30 months to build 27 homes at 295-301 Histon Road, Cambridge, 10 of them classified as affordable.
It formed part of the then Mayor James Palmer’s initiative to use some of the £100m allocated to the Combined Authority for housing for “toolkit opportunities over and above just issuing traditional grant, such as a repayable loan agreement, as is being proposed”.
The loan to Histon Road Development Ltd was to acquire the land and develop the site after the company had said “that this will not happen due to constraints of a lack of funding from traditional High Street lenders and willing equity partners in the current economic climate”.
The CAPCA board was told that “providing the loan will enable 10 affordable units to be delivered under the current S106 agreement, without which the scheme will not proceed in the foreseeable future.
“No grant is requested or involved.”
At the CAPCA board today (May 31st) Steve Cox, interim executive of place and connectivity, advised that a final repayment date of the loan has been extended from May 7th, 2023, to September 2023 or earlier.
CAPCA has a charge against the property as security and has upped interest rates.
“The interest payable from 7th May 2023 to 31 August 2023 shall be 10.25%,” said Mr Cox.
“The interest rate payable from 31st August to 30th September and a revised default interest rate shall be 15%.
“The existing loan facility shall be varied to prevent any further advances.”
Histon Road Development Ltd will be required to meet the cost of CAPCA’s monitoring surveyor throughout the extended period.
Mr Cox said: “The Combined Authority’s Board authorised the grant of a loan to Histon Road Development LLP on 25th March 2020.
“In August 2020 the Combined Authority’s Board authorised a 7-month extension to the loan facility and a 5-month interest free period to mitigate the impacts of Covid 19.
“The borrower has asked for the repayment date to be extended as the programme has fallen behind schedule by several months.”
He said the circumstances are similar to those of a loan facility that the Combined Authority provided to East Cambridgeshire Trading Company and this facility was repaid on 31st March 2023.
“That project had also fallen behind schedule, but the developer arranged an alternative facility to repay the loan and interest by the due date,” he said.
The outstanding balance of the loan to Histon Road Development Ltd on 26th April 2023 was £8,172,292.43 (£8,889,539.63 including interest).
Once complete, said Mr Cox, the Histon Road site “will contribute towards achieving good growth as the residential development project qualifies towards completing 900+ homes by 2025”.
He told board members: “If the contract was not varied, there was a real risk that the properties would not be completed, or further delays would have occurred.
“This would have also led to reputational damage and potential litigation, receivership, and costs.
“However, varying the contract prevents further delays and noncompletion of the properties and secures the loan repayment.”
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