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My priority is to build as many affordable homes as we can. This new partnership with Sage supports that
Housing associations face serious funding challenges. By partnering with organisations like Sage, we can continue to deliver the affordable homes the country needs, writes Paul Hackett
Across the sector, development plans have been scaled back as COVID-19, environmental retrofit, fire safety costs and Brexit have put pressure on housing association budgets.
But could there be a new way to fund affordable housing, while protecting investment in existing homes? Through a landmark partnership with Sage Housing, we think so.
We’ve just signed a deal that will see Sage, the UK’s largest provider of newly built affordable housing, acquire 420 affordable homes from Optivo’s £1bn development pipeline.
As Sage Housing is a registered provider, all of the homes will remain in the regulated social housing sector. This transaction follows similar partnerships that saw existing shared ownership homes sold into a new vehicle.
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Two things make the Optivo and Sage partnership a landmark deal. It’s the first time a substantial grant-funded pipeline of homes under construction has been developed by a charitable housing association and acquired by a for-profit registered provider at practical completion.
Second, unlike previous transactions with registered providers, 155 of the homes are social rent, affordable rent and London affordable rent.
Homes England and City Hall have supported the deal, which we see as charting a new path for associations keen to keep building through challenging times.
What’s so important about this partnership is that it creates genuine additionality.
As well as managing the 420 homes, we’ll reinvest 100% of the capital receipt in buying land and constructing hundreds of additional affordable homes that wouldn’t otherwise be built.
That’s hundreds of families who’ll get the keys to brand new affordable homes, who’d otherwise be on
housing waiting lists.
The £106.5m we receive will boost Optivo’s ongoing commitment to land-led development. This will enable us to control quality, layout, design, tenure integration and service charge affordability.
We also anticipate developing more sites in partnership with Sage, unlocking additional development beyond
the 1,500 homes a year our financial plan currently supports.
My priority is to build as many affordable homes as we can and this new partnership with Sage supports that.
In my view this is even more important given the current strains on public finances.
“Deals like this have the potential to become an important part of the mix, by providing innovative ways to build more of the affordable homes the country so badly needs”
It will allow Optivo to increase land-buying, acquire larger sites and provide high-quality housing management services to more residents than our balance sheet would otherwise allow.
Partnerships like this are new. They won’t work for every scheme, or for every housing association. But I think deals like this have the potential to become an important part of the mix, by providing innovative ways to build more of the affordable homes the country so badly needs, and crucially, a new route to attract fresh capital into the sector.
These are challenging financial times for housing associations. I believe it’s absolutely right we innovate and find new ways to help more people in housing need. Through our partnership with Sage Housing, we’ve done exactly that.
Paul Hackett, chief executive, Optivo
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