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Opportunities for institutional investment in affordable housing

This report prepared by Peter Williams (CCHPR), Nick Salisbury (Barclays Corporate Real Estate) and Robin Caven (HCA) on behalf of the HCA’s Housing Finance Group offers an assessment of the potential for institutional investment in affordable housing and puts forward suggestions as to how this market might be developed.

The report is the product of desk based research for and discussion within the group over a series of meetings. It is evident this is a developing agenda and one which is important in the light of constrained public expenditure. The paper looks at both debt and equity investment. The report ends with a short conclusion setting out a number of key areas where development might be considered. 

This paper proposes a number of key steps that now need to be taken to give added momentum to the work already underway. These are; 

(1) Set up a structure for bringing the social housing sector and institutions together to engage in a sustained dialogue. This can build onto the existing presentations to institutional debt investors with the aim of improving understanding of the sector. 

(2) Preparation of a prospectus on the strengths and capacity of the affordable housing sector and the potential returns to institutions. This will require detailed work on yields and returns under the new rent regime. 

(3) Specifically engage with local authority pension funds. 

(4) Undertake a specific study of how current shared ownership/equity assets might be monetised. 

(5) Undertake a detailed study of the costs and benefits of index linked financing for RPs. 

(6) Take forward the exploration on equity investment in RPs. In particular the possibility of reclassification of existing social housing grant to facilitate equity investment and suitable governance structures could be explored. 

Full Report

PDF document icon 110311 Institutional Funding.pdf — PDF document, 154 KB (158212 bytes)

Authors

Peter Williams

Nick Salisbury

Robin Caven

Publication Date

13th April 2011