Metropolitan targets £70m deal

The plans include both new build and existing homes and would provide more than 1,000 homes for shared ownership.

It says it is in advanced discussions with three firms interested in investing in what would be the first deal of its kind in the social housing sector.
The housing association said that it would make no official announce-ments on the discussions until after an election, as changes to housing policy as a result could affect the plans.

Metropolitan said the co-investment plans could work with or without the grant from the Homes and Communities Agency. Private equity would fund about 25 per cent of the property’s value.

Some of the parties in discussion with the association are also keen to make the investment satisfy ethical and Sharia finance principles, which prohibit the payment or acceptance of interest fees for the lending and accepting of money.

Graeme Moran, managing director of Metropolitan Home Ownership, said that as more final salary pensions came to a close because of the low inflation environment, funders were looking to direct funds at products with profiles similar to index-linked investments which would provide healthy returns.

He added: ‘Property with index-linked rents and a steady but longer term capital return like intermediate housing might offer that profile.’

Mr Moran said that in order for the scheme to remain an affordable housing option and still provide returns that would attract investors, these would have to be guaranteed a slice of returns from sales receipts.

David Eastgate, chief executive of Hyde, said: ‘It is interesting that someone is looking at that model because you need a high level of return for private investors to be interested.’

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