As ‘for-profit’ housing providers have grown considerably over the last decade, Housing Industry Leaders analyses whether this poses a risk for shared ownership or whether it will boost housing developments.
Recently, Savills Housing Consultancy published a report exploring the growth in for-profit providers, which found that the sector has grown to 69 providers, owning 28,164 mixed-use properties.
This is up from 18 organisations owning 187 homes back in 2013. This decade has seen huge growth for the sub-sector, prompting mixed responses, from fears of providers selling up directly impacting residents, to ‘for-profit providers incentivising house building across the UK.
Part of the report involved surveying these providers about growth plans up to 2030. Interestingly, many providers have certainty that this growth trend will continue at the back end of this decade, with the growth of another 9,300 by the end of 2023, reaching a total of over 110,000 by 2028, with over 100 providers in the field.
In a housebuilding era of slow growth, some in the sector feel like the certainty in this sub-sector could spur wider growth in other sub-sectors. Others fear that ‘for-profit’ providers may buy up pre-existing housing stock, and it may not lead directly to more houses being built in the short to medium term.
Growth in the market has doubled since March 2021
Since March 2021, there has been a doubling in the growth of this type of provider which has been driven by an astonishing increase of 131% of general needs rented homes owned.
While still owning a small proportion of overall stock, just 0.7% of total stock in 2021/22, the market share has increased threefold over the last three years. This highlights significant growth in the sector.
Breaking down the market share further, just three companies own 77% of all stock in this sub-sector but the report explained that there will be diversification as pipelines are built over the next years.
Shared ownership definitely dominates the for-profit housing stock and is projected to have a share of 69% of all stock by 2028, up from 59% currently. The rest of the share is between general needs rented and supported housing.
Fears around a ‘for profit’ cash in continue to linger
Some of the fears of this growth are that providers might seek to cash in on profits by selling stock. This could cause a lot of disruption to the market, and impact shared owners.
Despite this, though, Savill’s report indicated that 90% of providers have no current plans to exit the sector in the next 20 years. However, this is naturally subject to change depending on the landscape of the sector over the next decades.
The survey also found signs of increasing collaboration between traditional ‘not-for-profit’ housing associations and the ‘for-profit’ sector.
Nearly 90% of associations would consider one of these partnerships, while 43% revealed they are already working in some way with for-profit providers.
Collaboration between the two could be expected to grow further, as both FP and NFP sectors can offer each other unique values, experience and financial backing that they could not achieve on their own.
Echoing this, the survey revealed that nearly 90% of associations would consider one of these partnerships, while 43% revealed they are already working in some way with for-profit providers.
Explaining this further, it was stated: “Partnerships between for-profits and traditional housing associations are beneficial for both sides. For-profits have significant volumes of capital to deploy and seek strong ESG characteristics but lack operational and development capabilities.”
On the other hand, housing associations have in-house operational and management expertise but require access to investment capital to invest in existing stock whilst maintaining their development programmes.
While this could be a win-win for collaboration, development programmes, and the sector as a whole, there needs to be a specific focus on keeping rent affordable for those living in the social housing sector and shared ownership programmes.