Denton: Housing associations need to move out of their comfort zones

COMMENT: As I was growing up, by the age of 10, and through family circumstance, I had lived in numerous different places. Some were owned homes, some were rented, one was council and many were temporary. I had to attend six different schools during that time – many were fantastic, others not so good. Lucky for me, I had a supportive mother to pull us through difficult times. I came into a housing association from a career in the private sector, in large part to help those thousands of children who are, like I was, in temporary accommodation back into stable homes so they can have better lives. Research shows that this probably means a healthier diet, reduced anxieties, a better education and improved overall life chances. At Hyde, we don’t just provide the roof over their heads. We provide the stability so many crave, in affordable tenancies in decent, well-maintained houses. We also offer responsive services – whether that is by way of individual support or a structured and well-supported community – often delivered by us but on many occasions through a range of strategic partnerships. Value to society Independent research recently commissioned by Hyde shows that the annual value to society of a social tenancy was approaching £17,000 per year. Not only does a social tenancy deliver better outcomes for residents across education, mental and physical health, and improved employment prospects, it also delivers savings to local authorities, the police and the NHS. But there is always more we can do – we have large but ultimately limited funds with which to do this. A genuine crisis such as this requires creative thinking to stretch those funds further. Homes England and the Greater London Authority are unquestionably doing their part, and grant funding coupled with s106 delivery remains vital. Even then, we still need to use our imagination to come up with funding models to deliver the homes the country needs. Institutional joint ventures Prior to Hyde, I spent more than 20 years in commercial property and, in some small part, helped institutionalise it into a highly professional, transparent and successful sector. This has given me confidence to explore joint ventures with long-term institutional capital in order to provide “additionality”. This is particularly true when we consider that the future of new housing must ensure that it is part of a coordinated, mixed-use placemaking offer – more than just mixed residential tenures. True placemaking includes employment, leisure, retail and community space as well as great homes. But let’s get real. Housing associations rarely have the skill sets to execute such complex projects alone. By forming joint ventures with those that do, these ambitions can be realised. Institutional investment in residential property is commonplace in the US, Germany, the Netherlands and Scandinavia, to name just a few, but has not been in the historically fragmented UK market. This is now changing, with pension funds increasingly seeking long-term stable returns from initiatives such as build-to-rent. Attractive proposition The social housing sector is now seen as an attractive proposition due to its very stable occupancy and returns, along with good regulatory oversight. An ageing demographic and a looming social care funding crisis will further compel greater integration of all sorts of capital into the residential sector in the future. The desire to deliver genuine communities, combined with the fact that residential property – not just build-to-rent but also social housing – is now regarded as an institutional asset class in a way never before seen in the UK, means that there can now be a constructive discussion about whether housing associations always need to own the homes they manage. In future, we may well see a funding model where housing associations help build and manage homes that are ultimately owned by pension funds. Using their capital and our ability to deliver will be a way to truly build the additionality we need. But what about residents? At Hyde, we already manage homes on behalf of others and have adopted an “ownership blind” mentality towards our customers and residents. There is no reason that we shouldn’t apply the same approach on behalf of institutional investors. Delivered well, this could be the start of something very special within the sector, which could provide a genuine win-win for all involved. Peter Denton is group finance director at the Hyde Group