Private landlord looks set to branch out into affordable homes
Grainger to launch social housing arm
The UK’s largest listed private landlord is set to join the wave of for-profit social housing providers.
Grainger last week submitted an application to the Homes and Communities Agency’s new regulatory committee. If successful, it would make Grainger one of the most significant new entrants to the affordable housing market.
The landlord, which owns or manages more than 40,000 homes in both the UK and Germany, also said it would explore the opportunity of forming a social housing real estate investment trust, pending the outcome of a government review into REIT legislation. REITs are tax-efficient vehicles to attract institutional investment.
‘There have been a few false starts in terms of residential REITs but having read the latest consultation document it’s something we are quite excited about,’ said John Beresford, development director at Grainger.
As tipped by Inside Housing, the company will own and manage properties under a new subsidiary known as Grainger Trust. It has secured planning permission for a development in Waterlooville, Hampshire, which will deliver more than 1,000 affordable homes, under a section 106 agreement.
It hopes to develop another 2,500 affordable homes in the next decade and will look to buy existing portfolios of properties from other providers.
Grainger’s launch of a social landlord arm is dependent on the HCA allowing it to charge up to 80 per cent market rent as part of the affordable homes programme. But as it did not bid for the first round of funding, it will be initially dependent on so-called ‘short-form agreements’ which allow new providers to take part in the programme. These agreements would let Grainger and other new entrants to develop affordable homes on the same terms as the HCA’s current delivery partners.
Mr Beresford confirmed that the landlord would bid for a second round of funding in 2015 if the HCA’s programme is continued.
The sector has reacted with caution to the rash of for-profit providers. ‘There’s a desperate need for homes and for-profits could help fill the vacuum,’ said one housing association chief executive. ‘But how will they spend the money? Investors always want a return and trying to get a yield above 4 per cent is very difficult.’
Grainger’s application follows successful attempts to launch for-profit provider arms by Pinnacle Regeneration Group and temporary housing provider Orchard & Shipman.