Firm owned by London councils strikes £750m partnership to buy and refurbish 2,500 homes

The 2,500 properties will be procured over the next two to three years in a leasing deal that will run for 40 years. Capital Letters will have the option to purchase some of the properties for £1 at the end of the period, with the organisation saying that the homes will therefore remain available to Londoners in perpetuity.

Sue Edmonds, chief executive of Capital Letters, said: “By partnering with Home Safe Housing and having a mixed-economy portfolio, which includes market rent as well as LHA-rent homes, we can work together to support Capital Letters’ member boroughs, providing affordable housing to alleviate homelessness, built on a sustainable, financially viable, independent business, working with a like-minded investment partner.”

Capital Letters’ 10 member councils are Brent, Camden, Croydon, Enfield, Hackney, Harrow, Havering, Lewisham, Merton and Waltham Forest.

A further 11 partner boroughs quit in 2023 after the not-for-profit firm became a private-sector landlord and introduced membership fees.

The company, formed in 2019 and originally funded by the government, unveiled plans in late 2021 to lease 4,000 mostly new build homes from investors in a deal worth £1.5bn.

Prior to that, its model had been based on partnering existing private landlords with local authorities, with homes available to let at LHA rates.

“The focus in Capital Letters’ early years has been on successfully procuring nearly 6,500 homes for our member boroughs to use for homeless families who desperately need them,” said Ms Edmonds.

“Now the London rental market has changed so dramatically, we have focused our service on being a great landlord and providing these homes ourselves, which is a better way of meeting the increasing demand.”

In all, more that 60,000 households in London are experiencing homelessness, with a 70% increase in the number of families in temporary accommodation over the past decade. In February, London Councils data revealed that boroughs’ monthly spend had reached £90m during 2022-23.

At the same time, there has been a year-on-year drop of 76% in the number of new homes being built by London’s largest housing associations.

Jared Fox, Home Safe Housing’s chief executive, said Capital Letters “shares our social mission of alleviating homelessness and has the pedigree to ensure a robust and well-governed project”.

He added: “We know that, together, we can ensure the investment made will change lives for families in London, with thousands of homes being added to London’s affordable housing stock in perpetuity, and that the project remains financially viable for investors.”

Meric Apak, Camden Council’s cabinet member for housing and chair of Capital Letters’ membership body, said the new scheme was “the culmination of a lot of hard work and effort”. 

“To see it come to fruition is excellent, because this partnership means more affordable homes for people in need in London,” Mr Apak added.