Catherine Raynsford says alternative to finding new sources capital is to ‘sit on rent roll’ and not build anything
There is still resistance in some parts of the social housing sector to the concept of for-profit providers and the argument for them needs to be won, a director of L&G Affordable Homes (LGAH) has said.
Catherine Raynsford, speaking at the Housing Forum’s annual conference in London yesterday said: “There is a hearts and minds argument that it’s important to win, and I do think we have to keep having the conversation.”
Raynsford, managing director, major stock acquisitions at for-profit LGAH, said: “There is definitely resistance in some parts of the traditional sector to the entry of you know what is perceived to be private capital and I do struggle with this slightly because there’s £120-odd billion pounds worth of private debt in the traditional sector.
“So we are a sector that is absolutely supported by private capital. And for 30 years we’ve borrowed in increasing amounts to be able to build really substantial development programmes and pipelines and organisations that are larger, stronger and better as a consequence of the development that’s been done.”
She said the traditional sector cannot continue to borrow in the same way it has done over the past few decades.
“So you have to have an alternative solution, which is either at the moment that you retrench and sit in your rent roll and don’t build anything, or you find alternative ways to use your skills and expertise, your capability, the development teams that you built up in order to continue to do more.”
“I would argue that doing that on behalf of well-aligned capital of a different sort, in order to deliver more homes for more customers, is a great way of doing things,” she said.
Raynsford stressed however that the for-profit model isn’t for everybody and that “not everybody has to get involved in every single model.”
Raynsford, who in January will join Vistry as group partnerships director, was instrumental in setting up a new 50/50 joint venture between LGAH and Hyde last year which was hailed by many as a blueprint for institutional investment in social housing at scale.
The call to look at different sources of private funding in housing was echoed at a different session at the conference by Helen Rieman, business growth director at Hill Group.
Rieman said developers need to work “smarter with the private institutions, bringing in different types of funding” to build new homes and replenish and maintain existing stock. She said: “We’ve got the challenge of construction costs being more than sales prices, the model is fundamentally broken now. But equally we’re in a position where we can’t carry on looking to the government for grant because that isn’t necessarily there.”
Earlier, Lucian Cook, head of UK residential research at Savills, pointed to a wealth of data about the current and future prospects of a housing market recovery, including the RICS Residential Market Survey, which he described as the “best unsophisticated lead indicator as to what will happen in the UK housing market going forward”. He pointed out that the survey is showing both the balance of opinion as to what is happening to house prices and what’s happening to new buyer inquiries in the market as currently in negative territory.
He said: “It is quite difficult at this point to be particularly positive about the short-term prospects for the housing market, but that is really the reality.”
He said the government has implemented substantial levels of planning reform, which were “an absolute prerequisite” to improving housing delivery, but ministers ”do not have a lot to show for it” at the moment.
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