Richard Connolly, CEO Rentplus, discusses the place of institutional investment in the affordable housing sector, the importance of working collaboratively and the need to provide alternative housing options. Successive governments have stated that housing is a top priority, yet in two decades the UK has had 15 housing minsters, the numbers of homes being built has not kept pace with population needs and the cost of housing has spiraled.
It is only in recent times that the debate surrounding the delivery and quality of affordable housing in the UK has heightened sufficiently to put it at the top of the agenda, culminating in the housing white paper and the recently announced social housing green paper. Accelerating the delivery of affordable homes is at the heart of finding solutions to fixing our broken housing market. To do so, there is an urgent need to work collaboratively to ensure that the solutions include the injection of additional money into the housing market, as well as providing choice and opportunities for all sections of society to have security and a place to call home.
Rentplus was borne out of a recognition that the housing market does not provide sufficient housing options to meet the needs and aspirations of all sectors of society, particularly those individuals and families who are not considered a high priority for social housing, who cannot immediately afford a deposit, are at risk of no-fault s21 notices and don’t have access to the bank of mum and dad. We also identified this as an opportunity to work in partnership with local authorities to accelerate the delivery of affordable housing, provide them with a financial return and achieve affordable housing policy levels in their areas whilst offering a new housing tenure for local people.
We welcomed Alok Sharma’s recent confirmation that it is the government’s intention for privately funded affordable rent-to-buy models to be specifically considered as affordable housing within the new NPPF definition. This will ensure that affordable rent-to-buy becomes a mainstream affordable housing tenure. Rentplus is entirely funded by institutional investment, meaning our model delivers additional affordable homes at no public cost and both complements and augments what local authorities and housing associations are able to build.
Facilitating the injection of private institutional investment into the affordable housing market could be one of the keys to unlocking the crisis. From our own discussions with investors, we know there is potentially £40 billion of institutional investment available. The advantage of the Rentplus model is that it provides a win-win for local authorities. Where Rentplus has already developed schemes, up to 60% of tenants came from either the Choice Based Lettings scheme or the waiting list; of these, over 30% moved from existing social housing, freeing these up to house people in need and supporting local authorities to meet their wider housing responsibilities.
The National Housing Federation recently highlighted that £9.1 billion of public money is being spent on housing benefit, a substantial increase since public investment in affordable housing reduced, with much of this ending up in the pockets of private landlords. Rentplus delivers homes without any grant or public subsidy, ensuring central and local government funding can be fully invested in providing other types of affordable housing.
We wholeheartedly agree with the Chartered Institute of Housing report published last month that emphasised the need for local authorities and housing associations to develop close working relationships in order to meet housing need. Working collaboratively with both local authorities and housing associations is central to the way Rentplus works, delivering more affordable homes through partnership.
The Rentplus model helps ordinary hard working people and benefits local authorities, housing associations and developers. In the housing white paper the government stated that at least 250,000 new homes are needed each year and with the continuing issue of affordability, new solutions and options are required. Delivering sufficient homes of a variety of tenures to meet the needs and aspirations of everybody is crucial. Affordable rent-to-buy has a key role to play in creating choice and in tackling the housing crisis.