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Regional stock swaps help to deliver greater financial capacity for new build homes, report finds
Stock rationalisation deals between regions help landlords boost development pipelines and improve financial capacity, according to new analysis by a major consultancy.
Regional stock swaps help deliver greater financial capacity for new build homes, report finds #ukhousingThe research by Savills explores how social landlords can use stock rationalisation to unlock capacity to deliver more homes amid current financial pressures.
Researchers found that in the past three financial years, registered providers (RPs) engaged in selling stock either to another RP or to tenants delivered almost three times as many new build social homes.
This trading has matured into a market worth more than £500m annually, the report found, as deals have grown larger and involve a wide array of organisations, including housing associations, for-profit registered providers and local authorities.
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At the same time, each trade of a social home sold into a non-social tenure is counterbalanced by more than seven new social homes being delivered.
“This shows how stock rationalisation remains important in unlocking greater volumes of new social housing,” the report said.
Chris Newman, director of Savills’ Affordable Housing Consultancy, said that landlords are often asked questions about why they sell homes, and whether they are just “moving homes” around within the sector.
He added: “What this paper demonstrates is that trading homes actually diverts resources and capacity to the right places and to organisations that are perhaps better able to deliver additionality and development.
“Through divesting of homes that are geographically dislocated to a landlord who has a strong local presence and is able to manage them at a much more efficient rate, the capital receipt can then be used to develop in a core area for that selling landlord.”
However, the report cautions that the new social homes being built may not always be offered as “exactly the same tenure”, with viability challenges making the delivery of general needs social housing difficult.
This has the potential to change given the recent announcement of £39bn of government funding for affordable housing for the new Social and Affordable Homes Programme 2026-2036 in the Spending Review.
Mr Newman said it is “entirely feasible” that social rent homes are being sold in one part of the country to fund the development of shared ownership or affordable rent elsewhere.
“I don’t necessarily think this is a problem, because the social homes that are being sold are being sold within the sector, so they’re not a net loss of social housing,” he added.
Where it may be more problematic, Mr Newman said, is when homes are sold out of the sector. “Plainly, that creates an imbalance which will cause issues.”
The report also highlighted the growth of the market for shared ownership homes, which now account for 21% of homes traded over the past five years.
“One potential driver of the interest in [shared ownership] sales is that sales allow for the release of capital, a key need for many RPs at a time of acute financial pressures,” it said.
The type of deals being struck has changed in recent years, with data showing a trend towards fewer, larger transactions involving more sub-market homes of various tenures.
Over the previous decade, just under 13,000 social homes exchanged hands on average each year, according to statistics from the Regulator of Social Housing, with the most activity taking place in the early 2020s.
In the year 2021-22, 16,400 social homes were bought or sold, marking the peak in trading.
This was driven by several large deals, including transfers of stock between a parent company and a subsidiary, such as Sage Homes. There were also major swaps between providers, such as The Guinness Partnership and Paradigm’s exchange of more than 2,000 social homes in 2021.
Since then, activity has fallen back to rates seen in the 2010s, although sales to tenants were 50% lower in 2023-24 than in 2021-22, mirroring a wider decline in transactions in the housing market.
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