For-profits to own at least 150,000 homes by 2030 as social rent a target, Savills says

Savills said this “aligns” to government policy, with social rent a priority under the current Affordable Homes Programme (AHP).

“There is also a growing view amongst [for-profit RPs] and their financial backers that rented tenures, particularly social rented homes, offer greater social value, being let to households in the greatest need of housing,” the agency added.

It comes as the tension between parts of the traditional housing association sector and for-profits has risen after comments earlier this year by the boss of the National Housing Federation (NHF). Kate Henderson, chief executive of the NHF, told a committee of MPs that for-profits are not “the answer to the social housing crisis”.

Currently there are 80 for-profit providers that between them own around one per cent of all affordable homes.

However, Savills predicted that tie-ups between traditional landlords and for-profits will increase. 

Writing for Social Housing, Steve Partridge, director and head of the Savills Affordable Housing Consultancy, said: “Despite the early scepticism of which we are all aware, we are in a completely different place as the two sub-sectors have already begun to develop meaningful partnerships to support the delivery of new homes.”

It comes despite the Regulator of Social Housing warning housing associations about the risks of partnering with private capital.

For-profits have developed 13 per cent of all affordable stock in the three years to March 2024, and this share is expected to rise as housing associations turn away from building homes, Savills said. 

Eleven for-profits registered in the past year, while Savills said there are a “number of large investors and developers currently seeking registration”.

However, its report added: “The current challenges of delivering affordable housing (and housing more broadly) have deterred some investors.”

The growth of the for-profit sector has not been as rapid in the past few years as previously predicted by Savills. In 2022, the agency forecasted that for-profits would own 140,000 homes by 2027. 

The proportion of investors looking to target affordable housing fell to 22 per cent this year, compared to 38 per cent in 2023, a separate Savills survey found.

But Savills added: “Still, this represents a sizeable pool of private capital which can be drawn into the sector.”

Investors are adopting a range of approaches including registering new for-profits, buying existing entities or lodging funds with investment managers who already have a platform in the sector, Savills said. 

Seven of the registrations in the past year were by Legal & General and Sage adding extra entities, which mean they now own 14 for-profit providers between them.

Across the two groups and BlackRock-backed Heylo, they own 72 per cent of for-profit stock.