For-profit providers call on Rayner to remove tax and regulations ‘disadvantage’ to attract more finance for social housing

A group of for-profit providers backed by institutional capital has written to Angela Rayner calling for changes to rules that “disadvantage” them compared to traditional non-profit housing associations.

The seven providers (see box below), which call themselves the For-Profit Registered Providers’ (FPRP) Network, have written to the deputy prime minister requesting a meeting to discuss “how further capital can be encouraged” for social and affordable homes.

The FPRP Network said the for-profit sector has raised nearly £1bn of equity capital from UK local government pension schemes alone and this, with leverage, is “expected to contribute up to 10,000 new affordable homes.” It said it believes it is “entirely possible” to increase equity fundraising to £3bn a year, leading to 30,000 new homes annually.

However, the letter, seen by Housing Today, said there are “various steps” that would help encourage further investor interest.

It said adjustments to rules that “disadvantage for-profits vs non-profits”, such as Stamp Duty Land Tax, grant repayment and access to exempt accommodation payments, would help to encourage greater commitments to funding.

 “There is considerable scope for FPRP activity to ramp up significantly, bringing benefits for government in supporting achievement of your housing delivery objectives”, it said. “There are various steps that would help encourage greater investor interest and commitments of funding to the development of new homes.”

The network also suggests public statements from ministers encouraging institutional investment and acknowledging it has a long-term role as part of social and affordable housing provision, would also help.

In common with the non-profit sector, the FPRP Network said a 10-year rent settlement would provide certainty over incomes. It is also calling for closer engagement with Homes England and the Greater London Authority to explore partnership opportunities and continuation of the mixed tenure approach to grant provision.

The letter said greater customer service expectations, fire safety remediation and decarbonisation all mean “traditional housing associations and local authorities are now dedicating a more substantial part of their attention and revenue to improving their existing homes”.

“We do not see FPRPs as in any sense competing with, or a rival to, traditional housing associations and councils. Our view is that both are needed to meet the nation’s huge housing needs”

It said: “This has reduced their capacity for new development, particularly considering building cost inflation and high interest rates. This is where the FPRPs can step up to help.”

The letter said that there has been a growth in the number of partnerships between for-profit providers and non-profit housing associations.

It said: “We do not see FPRPs as in any sense competing with, or a rival to, traditional housing associations and councils. Our view is that both are needed to meet the nation’s huge housing needs. We believe there is symbiosis between the two sub-sectors, and indeed a gradually growing number of non-profit housing associations are establishing their own FPRPs, as they see the potential benefits in accessing new funding streams.”

A spokesperson for the FPRP Network said: “The signatories have suggested a constructive dialogue with government and other relevant statutory bodies to discuss ways to achieve an appropriate mix of social and affordable housing by type and tenure to tackle the national housing shortage we face today”.

The Ministry for Housing, Communities and Local Government has been approached for comment.