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First Priority investor takes £24m portfolio back in house
One of the investors that leased homes to struggling First Priority Housing Association has taken its portfolio back in house, it revealed at Housing 2018 today.
Funding Affordable Homes (FAH), a social impact fund which has invested £120m in nine schemes, has taken back 32 specialist supported housing units it had leased to First Priority. They will be managed by FAH’s registered provider arm.
The Regulator of Social Housing first raised concerns about First Priority earlier this year, warning that it “continues to trade on the goodwill of its creditors”.
Speaking at Housing 2018, Paul Munday, chief executive of FAH, said that the decision to take the units – which cover 103 tenancies – in house would “hit us financially” but would be “mitigated” by its eight other investments. The investment is worth £24m.
Mr Munday said FAH would manage the properties in the short term only, ideally for no more than six months.
“We will put right the failings of First Priority,” he later told Inside Housing.
FAH’s model is to enter leasing arrangements with partner housing associations, which then rent out the homes.
The fund has £120m invested but plans to double that over the next 12-18 months.
When it was downgraded, First Priority leased properties from 26 organisations. One of these, Civitas, has since transferred 44 homes worth £40m to Falcon Housing Association.
It is one of several small housing associations to have grown rapidly in the past year by leasing homes to investors and agreeing to pay an index-linked return as a result.
