‘It’s not been the easiest’: how for-profits are engaging with the Social and Affordable Homes Programme

How have they found engaging with Homes England and the Greater London Authority (GLA)? How did they react when the funding agencies made last-minute requests asking social landlords to rework their bids? And what impact has this had on their investors, given private money is also on the line?

‘We need a better strategic relationship’

Inside Housing approached the top 12 fastest-growing for-profits for this article to ask for their views on the SAHP. Many were reluctant to go on the record at this stage, saying they were focused on the SAHP bidding process and working with Homes England and the GLA.

However, some themes emerged in our background conversations: a sense of frustration around the programme rules chopping and changing, and a feeling that Homes England was ahead of the GLA in its understanding of and engagement with for-profit providers. 

“We need a better strategic relationship with the GLA,” says one senior advisor in the affordable housing sector. “The GLA historically benefited from really strong housing delivery from [non-profit] registered providers. Now they have to engage with for-profits.” 

A spokesperson for the mayor of London said: “Tackling London’s housing crisis is a top priority for the mayor and he is doing everything he can to deliver the homes Londoners need.

“City Hall has engaged with a range of possible delivery partners and is pleased that the new Social and Affordable Homes Programme has attracted significant interest from both profit and not-for-profit providers, as well as other potential delivery partners.

“Alongside this, we are engaging with developers, housing associations, local authorities and place-based organisations to ensure that the programme is successful. Allocations have yet to be agreed and decisions will be made based on value for money, delivery certainty and priorities set out in the funding guidance.”

Homes England declined to comment, stating that bidding rounds are still live and commercially sensitive.

Grant caps ‘risk slowing delivery’

Shaun Holdcroft, head of affordable housing at asset manager Legal & General (L&G), says the organisation is bidding through both the Homes England and GLA programmes for a “pretty substantial allocation” from the SAHP. 

L&G Affordable Homes, the investor’s affordable housing arm, completed 1,408 homes in 2024-25, making it England’s second-fastest-growing for-profit provider, as Inside Housing Living reported last year. The asset manager raises third-party capital from local government pension schemes and funnels it into affordable housing. 

L&G is hoping to qualify for Homes England’s ‘Strategic Partnership Plus’ route or, failing that, as a regular strategic partner. It has also gone in “for pretty much the maximum allocation” the GLA indicated it could bid for.

Altogether, Mr Holdcroft says, L&G is hoping to deliver upwards of 4,000 homes under the programme “as quickly as the grant can be made available”.

“We definitely think we fit into the ambitious category,” says Mr Holdcroft. However, he adds, “it’s not been the easiest of processes”.

Mr Holdcroft prefaces his critique by saying he sympathises with where the funding agencies are coming from.

“They’re trying to ensure that they’ve got sufficient viable interest from a sufficient range of bidders to be able to give high levels of confidence to the government and taxpayers and the sector itself that delivery is going to happen. But a couple of things that have cropped up in flow… are causing us all to think quite hard.” 

The first issue, he says, is the GLA’s approach to regional grant rates. “It feels like the GLA have courted interest from local authorities, from organisations that maybe have got less of a track record in London… and what it costs to develop affordable housing in London.”

L&G recently funded 300 social rent homes in Colindale, Barnet, so “we’ve got a fairly good grasp of what the grant rate needs to look like”. He suggests that grant allocations per home in London need to be 60%-70% higher than a home outside the capital.

The risk, he says, is that the GLA has encouraged lowball grant bids, which “bring down the average rate at which grants are allocated to a point which isn’t viable”, Mr Holdcroft says.

“When there’s capacity to be matched to grant to be able to deliver the homes that are needed, frankly, the sooner those homes are delivered, the better”

He fears that grant gets allocated at rates which are “too low to make the market work” and then “nothing happens for a period of time”, causing “a storm in delivery”. 

Second, Mr Holdcroft points to the ‘re-profiling’ issue affecting social landlords across the sector.

In late May, after many landlords had already submitted their bids for the SAHP, Homes England and the GLA issued new guidance that capped the annual amount of grant that could be allocated each year. The agencies asked social landlords to rework their bids to push back the point at which they draw down grant to later years of the scheme. 

“It’s a shame that wasn’t established at the point where the programme was opened,” Mr Holdcroft says. “When there’s capacity to be matched to grant to be able to deliver the homes that are needed, frankly, the sooner those homes are delivered, the better.” 

The caps are effectively “back-ending” the grant programme, he explains. “Without the caps, we would deliver more in the early years than the caps will now allow us to deliver.”

L&G is still planning to take part in the programme, but “ultimately these things risk slowing delivery, and that’s just something [the country] can’t afford to see happen at the moment”, he says. 

If ministers want to improve the speed of new housing supply, “making the grant programme as impactful as possible in its first couple of years feels like the obvious big win”, Mr Holdcroft adds.

Section 106 still appeals

Other ambitious for-profits have not yet engaged with the SAHP, choosing to focus on Section 106 purchases instead.

Zen Housing, which is backed by European investment manager Tristan Capital Partners, now has a total of 1,600 homes completed or in delivery, all of which were acquired without grant funding.

“So far, we think we’ve been very successful with the [Section] 106s,” says Sergey Pichugin, operations director at Zen Housing.

He tells Inside Housing that the for-profit is aware of the grant programme and “interested to focus on it at some point”.

However, he says, there is still a “huge opportunity” in the Section 106 market, with non-profit housing associations stepping back and house builders struggling to find a social landlord to sell their affordable homes to.

Zen announced last month that it had bought 767 homes from house builder Vistry across 12 sites for an undisclosed sum.

Mr Pichugin acknowledges that the Section 106 market is now “changing slightly”, with a “lot more participants”. Zen will “probably start looking at some additionality” through grant funding, but it has “no hard plans” yet.

Reasons to be cheerful 

There are signs the GLA is taking steps to improve its relationship with investors. Last month it appointed property agency CBRE as a strategic commercial advisor.

Given that CBRE operates its own UK affordable housing fund, it is reasonable to expect that the agency will be able to share its learnings with the GLA. This may in turn benefit for-profit investors seeking to buy affordable homes in the capital.

Mr Holdcroft does acknowledge that there has been a “very welcome” equalisation of for-profits and non-profit social landlords in the SAHP. “This certainly helped us in terms of being able to explain to investors how the grant programme was going to be structured.”

However, the issues around re-profiling and grant rates “are slight flies in the ointment because they just create that little bit of uncertainty”.

Given where capital markets are at this moment in time (borrowing costs on government bonds rose to their highest level since 2008 in May, but have since eased back) he says, “anything that risks a change to the risk outlook, it’s just a little bit more problematic to get the money in the door”.

He comes back to the re-profiling guidance. “Was it really necessary? Could we have found a better way to do it?” 

For more coverage of for-profit affordable housing providers, check out our sister publication Inside Housing Living.