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REIT to set up company to advise supported housing association partners

The real estate investment trust (REIT) Civitas has announced plans to set up a company to advise the housing associations it leases homes to.

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Picture: Getty
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The real estate investment trust (REIT) Civitas has announced plans to set up a company to advise the housing associations it leases homes to #ukhousing

Civitas, which owns 587 which houses 4,119 vulnerable adults, made the announcement in an update to the stock market last week.

The REIT’s business model involves it signing housing associations up to long-term lease deals whereby they make monthly, inflation-linked payments to Civitas. It has spent £767m buying homes for this purpose.

Civitas told the stock market: “We are leading the development of a new, independent community interest company that is designed to work with our registered provider partners and offer advice, support and guidance as they seek to enhance their performance and gradings.”

The model, which sees investors signing housing associations to long-term lease deals, was criticised by the Regulator of Social Housing earlier this month.


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The regulator released a report saying it was “hard to see” how any housing association mainly financed by long-term leases can comply with its standards on governance and financial viability and calling some of their business models “unsustainable”.

In a message to the stock market, Civitas said that the report “contained no new information or opinion of material relevance to Civitas and its leases”.

Inside Housing analysis of Civitas’ figures in February showed that half of the homes owned by the REIT are leased to housing associations that are either non-compliant or under regulatory investigation. Exact figures since then are not available.

The new company will be set up to support the housing associations that Civitas works with to improve their gradings and performance.

As well as the new company, Civitas said it planned to introduce a special clause into any new leases it signs to deal with any potential difficulties housing associations might have making lease payments.

Trinity, one of Civitas’ counterparties, and First Priority, a former counterparty, have both previously found themselves with lease payments that were too high and were risking the sustainability of their businesses.

Civitas said its new clause would come into effect “in the unlikely event of a change in law or government policy that permanently reduces the income by registered providers”.

This would not have applied to the issues faced by Trinity or First Priority. They both found that although they had agreed a certain level of housing benefit with the local authority, this was not ultimately paid, as the council was unwilling to pay the unusually high rents.

Civitas’ stock market announcement also revealed that its average weekly rent is £211, compared to the average weekly rent for shared specialist supported housing, which is £185.60.

Civitas said there was no one available for comment when asked by Inside Housing.

Update: at 14.12 on 18.4.19 This story was updated to clarify that First Priority is a former counterparty to Civitas.

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