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Housing associations looking to offload shared ownership portfolios to institutional investors, says Savills
Housing associations are expressing interest in selling off shared ownership portfolios to free up cash to invest in existing homes and new supply, according to Savills.
Speaking at the Social Housing Annual Conference in London on Wednesday, Helen Collins, head of Savills’ Affordable Housing Consultancy, said she has been approached by “traditional” housing associations interested in selling “established” shared ownership portfolios.
According to Ms Collins, shared ownership is “inefficient” as loan security for housing associations, but is attractive to institutions because of Retail Price Index-linked rent inflators.
“So releasing shared ownership can have a disproportionate effect in terms of freeing cash to invest in existing homes and new supply,” she said.
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During a presentation of Savills’ new research into private investment in affordable housing, Ms Collins also said the organisation had seen a lot of traditional housing associations and new entrants use grant funding to do “bulk deals” with volume house builders.
Bulk deals involve house builders selling groupings of private sale homes to associations at a discounted rate. These are then converted to affordable housing tenures by associations.
Ms Collins said: “That’s a feature of the market. It’s not without merit – it keeps the house builders going, but it’s a feature of where we are at in the cycle. You can’t depend on that long term.”
Earlier this year, Inside Housing reported that housing associations were buying up new build homes from private builders at discounted rates, as a result of developers looking to offload stock amid Brexit uncertainty.
Ms Collins also said that Savills is currently being approached by two or three new investors each week, who are showing interest in entering the affordable housing market.
Her message was echoed earlier in the day by Rob Beiley, partner at law firm Trowers & Hamlins, who said his firm is being approached by similar numbers.
Mr Beiley said: “The investment that Blackstone made in Sage, followed by the investment that Legal & General made in their affordable homes platform, has made affordable housing acceptable to institutions as a whole.”
Last year private for-profit housing provider Sage Housing was set up with backing from private equity giant Blackstone, while Legal & General (L&G) set up a new housing association called L&G Affordable Homes.
Earlier this week, Savills published a report that said long-term private investors could help tackle the shortage of 60,000 homes a year. The report also found that there are now more than 50 for-profit registered providers, which own upwards of 5,000 homes.
