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For-profit housing provider Residential Secure Income (ReSI) has failed to complete a £60m acquisition of properties from a large London housing association in the timeframe envisaged as a result of the impact of coronavirus.
In April 2019 the two associations agreed a deal that would see ReSI buy 132 new build properties at Metropolitan Thames Valley’s Clapham Park development in south-west London.
However, in an update to the stock market on Monday, ReSI said that the coronavirus outbreak made meeting the end of March deadline for the acquisition of 73 homes from the association “impossible”.
The news on the deal came as ReSI said it anticipates “a delay in both its ability to grow shared ownership occupancy, as well as to grow the portfolio itself”.
The provider currently has 93 completed shared ownership homes with 52 occupied, 25 in progression and 16 available. It said it is seeing some first tranche sales being completed, with the company’s sales agent using virtual viewings.
Despite the short-term difficulties, ReSI said that it does not anticipate a long-term impact on shared ownership returns because of shared ownership “becoming a more attractive product in an economic downturn”.
The company added: “Regardless of the COVID-19 outbreak, the country will still have a significant shortfall of housing and this supply-demand gap will most likely become more acute through a countrywide lockdown causing reductions in earnings and housing delivery (caused by both construction sites closing and financial pressures on housing developers).”
ReSI said that it does not expect a “major impact” on shared ownership rent collection as the provider has “recently assured our shared owners’ affordability and financial security, each of whom has ownership interests in their home, and with rent underpinned by their mortgage providers”.
It did say, though, that it anticipates “limited staircasing” in the current environment.
The provider noted that it holds a “defensive portfolio” that has been positioned to survive economic stress, and said increased unemployment is unlikely to have a “material impact” on performance.
ReSI said debt service payments are expected to be unaffected and stressed it has a “strong liquidity and balance sheet position” with £5m of cash and positive cash flows in all operating units.
Inside Housing has contacted ReSI for comment.