A £40 million long term financing deal is set to bring 400 new homes to East London and Essex.

Estuary Housing Association, a provider of social housing across Essex and East London, has completed the agreement with international investment manager, M&G Investments. Santander GBM is understood to have assisted with arranging the deal.

A 12 month deferral rests on £20million of the financing.

The 30-year funding line will allow Estuary to launch an ambitious development of 400 homes over the next three years and Chief Executive, Paul Durkin, says the deal enables it to grow with confidence.

“The process of raising funds through a private placement was new to Estuary and we are very pleased that we have been able to raise funds at a favourable rate that enables us to meet our social purposes through the provision of much needed affordable homes in areas of acute need,” said Paul.

Half of the homes will be built in London boroughs while the remainder will be constructed in Essex and once completed Estuary’s housing stock will rise to 4,500 by 2018.

Head of Social Housing at M&G Investments, Mark Davie, believes Estuary plays a vital role in providing homes for a region with a severe shortage of housing.

“Financing of this type for housing associations enables them to contribute towards meeting the growing demand for affordable housing in their local communities,” said Mark.

“Our pension fund clients continue to seek cash flows over the long-term which are secured against residential property. M&G has now invested over £5bn in UK social housing through property transactions, public bonds and private placements and we’re keen to do more.”

Estuary originally relied on banks and The Housing Finance Corporation to meet their funding requirements but in recent years non-bank lenders have provided a much longer term finance solution.