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Regulator to meet with equity investors in supported housing

The Regulator of Social Housing is set to meet with investors that put money into the controversial model of financing specialist supported housing (SSH) to outline its concerns around how it is being operated, it has revealed.

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The Regulator of Social Housing is set to meet with investors in a controversial model of financing specialist supported housing #ukhousing

In an interview with Inside Housing, Jonathan Walters, deputy director of strategy and performance at the RSH, said investors had contacted the regulator asking for meetings to discuss the risks.

Mr Walters said that while “he wouldn’t be providing funders with investment advice”, he wanted investors to be aware of the regulator’s concerns around the model in its current state.

Last week, the regulator published a report criticising the model, which has become increasingly popular with investment funds. It involves them leasing homes to housing associations over long periods of time.

The housing associations then make monthly inflation-linked payments to the funds, leading, according to the regulator, to many of them having “unsustainable” business models.


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In the regulator’s report, it also warned investors that it would protect tenants’ interests first and that “it cannot guarantee” that investors will not suffer losses.

In response to the regulator’s report, Civitas and Triple Point, two of the leading social housing real estate investment trusts that lease SSH to housing associations, said the report contained no new information.

Private investors have spent more than £1bn amassing portfolios of SSH over the past two years, with one estimate putting the number of vulnerable adults living in SSH homes now leased from funds to housing associations at 75,000.

This money has generally been channelled through funds, either publicly listed like Civitas, Triple Point or LXi, which are real estate investment trusts, or through private funds such as Henley Secure Income Property Unit Trust, Equitix or Supported Living Infrastructure.

These funds raise money from investors, which could be pension funds, other institutional investors or high net worth individuals.

Mr Walters revealed that the regulator now plans to meet with some of these investors.

He told Inside Housing: “Some investors and other interested parties are asking us to go and talk to them and we will happily do so.

“Clearly, we can’t talk about individual credits but in terms of talking in general terms about this model and our concerns about it, we wanted the report to be something in the public domain saying this isn’t just about a problem at any one provider.

“We think there is a fundamental problem with this model at the moment, given how it is currently being operated, that needs to be addressed.”

He said he would be telling investors: “It’s your decision. We’re not giving you investment advice. But this looks like a risky part of the sector and if you’re investing in it, thinking you’re getting safe, secure, CPI-linked returns, then I’m not sure that’s right.

“You should be thinking about your due diligence and what return you’re expecting, because these organisations look very weak to us and they’re housing very vulnerable people.”