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Further investment fund to have leases with under-investigation association revealed
A further private-equity fund which has agreed leases with the latest housing association to be placed under review by the regulator can be revealed.
Trinity Housing, the third private equity-linked housing association to be placed on the Regulator of Social Housing’s ‘grading under review’ list, has worked with Henley as well as Civitas, sources close to the association told Inside Housing.
Henley is a huge investor with a fund specifically for social housing. Trinity is one of 10 housing associations to have leases in place with this fund.
Typically, homes are leased to housing associations who collect the rents from tenants and repay them to the funds – delivering an inflation-linked return to investors.
The funds tend to target supported housing accommodation where rents are paid through housing benefit and guaranteed by the local authority.
Henley, in a typical offering for funds of this type, promises investors a 5% annual return over the 25-year life of the lease.
Trinity is one of several organisations which has a large number of leases with various funds.
Earlier this year, the regulator wrote to 30 associations with similar business models, seeking “assurance that registered providers are financially viable and properly managed”. It has censured one – First Priority – for “a fundamental failure of governance” in February, and placed another – Inclusion Housing – on its grading under review list in May.
Trinity is now the third organisation to be investigated.
Inside Housing had previously only been able to identify Civitas through public records as having done deals with Trinity. The deals with Henley have only now come to light through contacts familiar with the organisation.
A spokesperson for Henley told Inside Housing: “Henley SIPUT is a discretionary fund set up to own long-term supported living housing for vulnerable adults. As part of this, Henley SIPUT acquires assets directly from the market with agreement for leases or leases in place with RPs [registered providers].
“Trinity is one of ten RPs with leases in place with Henley SIPUT but it has never directly acquired from RPs. No Henley entity has made any deals directly with Trinity.”
Like most of the associations involved with lease-based investment, Trinity houses vulnerable adults, typically people with learning difficulties.
The involvement of such housing associations in the world of private equity is partly due to the higher rents that this kind of housing is able to attract.
Trinity’s accounts state: “The association’s business is the leasing of properties with multiple individual housing units from a number of different landlords, the sourcing and letting of housing properties to tenants, and the appointment of managing agents and care providers to deliver specific groups of services to tenants.”
It has grown rapidly in the past couple of years, going from 319 homes managed for others in June 2016 to 795 a year later, according to its accounts for 2017. At that time, it owned 155 supported homes.
Now, its website states that it “provides in excess of 800 tenancies across 10 different council areas”.
The regulator is yet to confirm why it has been placed on its watchlist.
A provider is added to the list when the regulator is investigating an issue which may affect compliance with its standards for governance and viability.
