A senior Homes England official said there was a ‘natural fit’ between institutional investing and the social housing sector, and said the agency’s priority was to diversify the type of capital that social landlords had access.
Civitas’ Tayo Bilewu and Homes England’s Fay Mitchelson during a panel discussion on innovative financing models for the delivery of new homes (Picture: Guzelian)
Fay Mitchelson, head of joint ventures at Homes England, told the Housing 2021 conference in Manchester today that it was a ‘priority’ for the government’s housing delivery agency to ‘increase access to capital, diversity of capital, stability of capital” in the affordable housing sector.
During a panel discussion on innovative financing models for the delivery of new homes, Ms Mitchelson said there was a “natural alignment” between the sector and institutional capital and that there were many ” attractions” to use equity models, such as moving assets off the balance sheet and creating new revenue streams through fee arrangements.
She said Homes England was trying to ‘demystify both sides of the table’ and was particularly interested in ensuring that institutional capital could be used to fund the development of new supply, rather than ‘just taking the offer that Already exists”.
Earlier this year, Homes England invested £10million in a condominium fund set up by M&G, the big investor.
The fund is being used to eventually finance a £500m pipeline of around 2,000 condominium homes delivered in partnership with Hyde, with the homes owned by M&G but managed and maintained by Hyde.
Earlier this year, Inside the housing reported that traditional housing associations are increasingly seeking such deals, which would mean they own fewer homes than they build.
Speaking on the same panel, Tayo Bilewu, chief investment officer at Civitas Investment Management, said housing associations need to improve to ensure the relationship they have with investors is “equitable”.
He said: “How is the industry…getting away from the fact that capital is the saviour…and we are beholden to the dictates of the investor rather than dictating the terms of engagement? “
Civitas Investment Management describes itself as a “leading impact investor acting on behalf of institutions around the world”. It has focused its investments in the specialized sector of supported housing for adults with learning difficulties and disabilities, using a model that involves renting properties on long-term contracts to housing associations.
The social housing regulator has declared some of Civitas’ partner housing providers non-compliant.
Asked by social housing, Inside the housing Sister publication, if these regulatory judgments create a problem for investors watching the sector, Ms Mitchelson said: “When we talk about innovative and new things, it creates this perception of fear. How do we manage? How do we manage risks? And to be honest, it’s a process of time and precedent and the market is changing.
She added: ‘I think the activities that Homes England has been involved in today have demonstrated that as the government’s housing accelerator we have this unique role because we often provide the reassurance or trust around the sector – its stability and its future. – so certainly, our involvement in transactions has really been to target that space.
Anne Waterhouse, Acting Managing Director at A2 Dominion, said: ‘There are billions of pounds of funding that have been successful and delivered real results for customers in need of accommodation.
“There have been some tough deals that haven’t worked out and I think as long as we learn from those, borrowers take on some of that responsibility to really understand and work within the hurdles that exist and also the frameworks that exist, I think we can see more successful continuous innovative models coming to fruition in the sector.”