Spotlight: Equity investment in affordable housing

Growth in for-profit registered providers is constrained by the number of opportunities, not investor appetite

Onwards and upwards

For-profit registered providers (FPRPs) own just under 20,000 affordable homes, according to our latest analysis. That means investors have grown the number of affordable homes they own by 43% since the latest RSH data for 2020-21.

The number of FPRPs has grown too, more than doubling from 31 in 2017 to 64 in 2022. A strong pipeline of applications means it will grow further.

These new FPRPs come from a range of backgrounds. Some have backing from institutional investors looking to build large, long-term portfolios. Others are developers who want to retain control of the Section 106 homes they deliver, so they can sell larger, stabilised portfolios at a premium.

A third of the FPRPs registered since 2019 were from investors with an existing FPRP. This compartmentalisation lets investors hold tenure – or fund-specific portfolios, which carry different risk/return profiles and thus appeal to different types of funders. Some brand new entrants are setting up multiple FPRP entities simultaneously for precisely this reason.

Our survey says…

We reached out to the owners of all 64 FPRPs registered as at March 2022 to learn more about their current stock and growth ambitions. Using these results, detailed interviews with select providers, and company accounts data, we’ve assembled this portrait of the complete FPRP marketplace:

The results suggest we’ll continue to see rapid growth: providers predict they’ll own more than 29,000 affordable homes next year, rising to just over 110,000 by 2027. Accounting for the arrival of more providers, we estimate there could be more than 140,000 affordable homes in FPRP ownership five years from now, reflecting almost £25bn investment.

Read the articles within Spotlight: Equity investment in affordable housing below.

Articles within this publication

2 article(s) in this publication