Monday, 20 October 2014

Cosmopolitan investors could be left empty-handed

The investors that own a large proportion of stricken Cosmopolitan Housing Group’s student stock could be left with nothing if the 14,000-home landlord does not secure a rescue merger deal.

The social housing regulator’s plan to place Cosmopolitan in a moratorium if it fails to strike a deal with new suitor Sanctuary means the investors are under pressure to reduce the rent levels they are charging or face losing all future income, it has emerged.

Last week 80,000-home Sanctuary stepped in and replaced Riverside as a prospective buyer of Cosmopolitan, but the regulator warned there was a lot of work to do before any deal could go ahead.

Under the Homes and Communities Agency’s back-up plan, it would use the 28-working day moratorium to safeguard Cosmopolitan’s social housing assets. This would involve the sale of its social homes in order to pay off the group’s secured creditors.

The 9,000 homes could, under these circumstances, be bought by a single provider or in smaller chunks.

However, a moratorium would not result in debts to unsecured creditors being paid. These include the owners of many of Cosmopolitan’s student developments, who are understood to have been holding out in talks over the terms of these leases.

A successful sale of the social homes could therefore leave investors empty-handed.

The leases, which have caused much of Cosmopolitan’s financial difficulty because they were guaranteed against its social homes, were used to fund around two thirds of its existing student stock.

Riverside is thought to have wanted Cosmopolitan to have sold these leases or agreed better terms on them before agreeing to a merger. The 54,000-home landlord pulled out of talks as it appeared the two sides were not close to striking a deal.

The HCA would not rule out the possibility that, under a moratorium, either Riverside or Sanctuary could buy all or some of Cosmopolitan’s social stock.

Newsletter Sign-up

More Newsletters



  • Cosmopolitan: the true story


    The financial crisis which hit Cosmopolitan in 2012 and brought the housing association to its knees changed the social housing sector forever. Carl Brown reveals for the first time exactly how it happened and the lessons learned

  • ‘Regulator needs more resources’


    Report into problems at Cosmopolitan pinpoints overwhelmed regulator

  • COSMOPOLITAN REPORT: Regulator 'could have prevented Cosmopolitan crisis'

    17 June 2014

    The English social housing regulator could have prevented the Cosmopolitan Housing Group crisis through more effective routine regulation in the 2000s, a report published today has said.

  • Who's who in housing law


    Meet some of the leading lights in social housing law. We asked Gavriel Hollander, former business editor at Inside Housing, now news editor at Legal Week, to find out who they are and what they do

  • Five commandments for landlords after Cosmopolitan


    The Cosmopolitan crisis had a huge impact on the housing sector. Now Carl Brown unveils five commandments to enable landlords avoid the pitfalls of the past.


  • Back on the front line


    WM Housing chief executive Pat Brandum went back to the shop floor to experience first-hand how her organisation helps vulnerable young people. Alex Turner finds out what she learned

  • A career fix

    19 June 2014

    Apprenticeships provided by construction firms are helping students straight out of school into employment. Stuart Spear takes a closer look at the opportunities available

  • Life lessons


    By offering a course in financial responsibility, Hyde Group is successfully preparing young people for life in their own home. Simon Brandon reports

  • Fighting back


    As the private rented sector continues to grow, so does the number of problematic landlords. Michael Pooler finds out how tenants are taking matters into their own hands to fight for better conditions

  • Better together

    14 November 2013

    By working with a social enterprise to bring 15,000 homes back into use, Leeds Council proved that a collaborative approach is best. John Statham reports

IH Subscription