How do housing stakeholders align future private and public spending to identify investment opportunities and help meet the City’s broader economic and spatial planning priorities – through the private rented sector?The private rented sector represents a growing proportion of the housing market nationally and locally and the only housing option for many households priced out of owner occupation but ineligible for affordable housing. As such it is of strategic and operational importance that provision of private rented sector accommodation is available in a quantity and of a standard which meets the needs and expectations of (potential) tenants.
The sector is currently characterised by small-scale, amateur landlords, many owning only one property and unable to offer any substantial increase in supply. Housing associations, in contrast, are well placed to take on a role in the sector, potentially able to deliver new supply at volume and having significant experience of managing and maintaining properties, albeit in the affordable sector. The pressures to which housing associations are subjected in the new financial reality post-2008 GFC make the sector an attractive proposition offering the potential to generate surpluses which can be reinvested in core affordable housing provision. The challenge for housing associations, however, may be accessing the investment needed to deliver new supply at volume. In the commercial sector institutions such as pension providers commonly invest in real estate, and although this practice is less common in the residential sector, interest in the model is growing. This research concludes that entering into institutional investment partnerships is a realistic potential element of the future strategies of housing associations (via a Bristol case study).
The move would align well with a sector-wide shift in focus from a business model which is primarily about housing the most vulnerable, and providing some community services, towards more complex strategies which include providing housing products and services in new markets which generate higher returns, commonly termed ‘commercialisation’. Specific commercially-orientated strategies adopted include evolving and more sophisticated asset management strategies and new approaches to allocations including more stringent pre-tenancy checks. Private sector landlords are similarly reviewing their approach to lettings, with indications that they will become increasingly selective in order to minimise the risk of rent arrears and other problems.
The Full Report can be Downloaded Here BHF_Final_Report