The BPF has launched a practical guide to support the increased delivery of affordable homes as demand continues to outstrip delivery and the country faces a shortfall of 95,000 homes each year.
The toolkit aims to demystify partnership models and assist the industry in evaluating effective ways to increase the delivery of much-needed affordable housing.
Rob Beiley, chairman of the British Property Federation’s affordable housing committee and partner, Trowers & Hamlins, said: “We have launched this toolkit as a practical guide to facilitate effective and long-term partnerships between investors and housing associations.”
“We know that against a backdrop of inflationary pressures and increased investment in existing stock, housing associations are having to pare back their development programmes. New partnerships with institutional investors offer housing associations new ways to maintain or enhance their delivery of much-needed affordable homes and meet their wider social objectives. Partnerships are not just about the exchange of funds, however, but the exchange of knowledge, skills, and ways of working can also be very beneficial.”
The launch of the toolkit follows the release of a report ‘Delivering a Step Change in Affordable Housing Supply’ from the BPF and Legal & General last year, which found without the creation of a new funding structure, there will be a shortfall of 95,000 new affordable homes each year.
The toolkit analyses the different structures for partnerships between housing associations and for-profits or investors and identifies several challenges that should be addressed in order to speed up the creation of partnerships:
- More holistic market data around valuations to help partners understand whether disposals/acquisitions are appropriate
- More standardisation of management agreements for the management of social housing by housing associations for for-profits, to speed up and simplify the process of putting these agreements in place
- A code of governance for for-profits, along the lines of the existing code for housing associations, to build confidence in for-profit registered providers as partners
- Support for the regulator having more resources to help bulk up their ability to work through new applications and ongoing oversight more fully
- Resolution, or at least clarification, of the different tax and grant treatment faced by housing associations and for-profits
Tom Paul, leader of the BPF working group on the guide and executive director of strategy & change, Southern Housing, said:
“This is a dynamic space right now, with extensive and wide-ranging bilateral discussions ongoing between housing associations and investors. As well as providing background on investor and HA perspectives, and some reflections on finding the right partner, the toolkit goes into detail on the risks and opportunities associated with different possible partnership models. We believe this is the first time the landscape has been mapped in this way, and we hope this helps potential partners to accelerate discussions and to find the models which best suit their needs.”
Ian Fletcher, director of policy at The British Property Federation, commented:
“The toolkit sets out the different roles, responsibilities, risk-sharing and aims to provide clarity on the routes that equity investors and housing associations can take to increase the supply of affordable homes in order to meet long-term societal needs. The key to an effective partnership is ensuring agreement on the scale of the shared ambition, location of new homes, financial expectations, and an appropriate sharing of risk.”
Since the report from BPF and L&G was issued in March 2022, economic conditions have significantly worsened with higher inflation, higher interest rate expectations and rent policy decisions exerting additional pressures on housing associations and underlining the need to find new ways of increasing the delivery of more affordable homes.
View the BPF toolkit here.
