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Joint ventures are an increasingly attractive model to stretch ambition
As more councils and housing associations plan to set up joint ventures, Boris Worrall explains why so many are taking a look
If you always do what you’ve always done, you’ll always get what you always got.
So said Henry Ford. And of course that might be absolutely fine, at least for a while.
But I believe the role of leaders in organisations is to create the conditions to maximise the impact we have, while ensuring the long-term sustainability of the business.
This is particularly important for housing associations whose reason for being is social purpose. It’s what we are here to do.
There’s an inherent tension here, because by definition doing anything differently from the past carries risk.
“The role of leaders in organisations is to create the conditions to maximise the impact we have.”
The question is, how can we do more while managing the risk?
Joint ventures – in theory at least – provide an increasingly attractive model for housing associations to stretch their ambitions, scale up delivery, generate more profit for their social purpose, and create outcomes which really have an impact for local people and communities.
All while managing and mitigating that risk of the new, bigger and different. No wonder so many of us are interested.
Fundamentally they can take two forms.
The basic form is a joint venture based around a specific contract, typically a development involving a significant proportion of market sales where the private developer has expertise and takes more of the risk as well as the return.
In Game Theory terms it’s a win-win arrangement which can be relatively straightforward to put into place, generally requires limited compromise on both sides and has the benefit of being able to walk away if things don’t work out as well as hoped at the end.
The attraction here is that it’s largely transactional in nature and so while it’s probably at the lower end of impact, the residual risk is low.
The site-specific nature also provides clear and relatively simple outcomes, timescales and clarity of roles and responsibilities. And it’s likely to be little more complex than a standard development contract, with no extra formal governance arrangements required.
“Formal joint ventures based around the creation of a new business entity, even if project specific, are a different ball game altogether.”
Like all partnerships, however, it has to be based on trust, shared values and aligned culture – otherwise there may well be trouble ahead.
Formal joint ventures based around the creation of a new business entity, even if project specific, are a different ball game altogether.
Get it right and the rewards and returns – social and financial – can be so much greater.
But like a marriage, you’re in it for the long haul and if things go badly wrong, divorce could be very messy.
There are significant legal and governance issues to work through, as well as a fundamental alignment around the ambition. It seems to me too that like any long-term partnership, there’s going to need to be a good degree of compromise along the way on both sides.
“We are beginning to actively explore where we can go next with this model at scale.”
In recent years Rooftop has done a number of contractual JVs, geared around risk and reward sharing on market sale.
Now we are beginning to actively explore where we can go next with this model at scale and potentially in more long-term arrangements.
For smaller organisations like ours, this offers an opportunity to pool resources, share skills and share risk and return; and in doing so, potentially unlock ambitions which we previously may have felt out of reach.
Together, I do think we can do more for people and communities. And that’s got to be worth a serious look.
Boris Worrall, chief executive, Rooftop Housing Group
