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Finance & Funding Policy

Working Together to Develop New Supported Housing

I’m prompted to write about this having recently been in discussion with social investors and property developers who are looking for community housing associations and provider partners to work with in the development of new supported housing.

I’ve also been asked to help connect providers with people who fund and develop property for use of supported housing.

Please get in touch directly with me and I can put you in touch with my wide network of contacts in the provider, housing association, commissioning and investor/developer sectors.

A Bit of Background

One of the issues that has preoccupied me lately is the way in which private and institutional capital has been and is being introduced to the sector to fund supported housing for people with often high levels of additional need.

Let me be clear; I’m very much in favour of this, but it’s important that it’s done properly by investors, commissioners, housing associations and care and support providers.

You’ll probably be familiar with my emphasis on Value Generation principles

  • Outcomes for people
  • Cost benefit to the public purse
  • Wider social and community benefit

It’s important that all parties have a common values base, such as Value Generation, if we are all involved with services for people with additional needs. If supported housing is developed without common values between the parties involved, the people who pay the price of failure are those who live in it and those who work directly with them to do so.

Private Capital for Supported Housing

Supported housing funded through private capital is a relatively immature “market” and the record so far is a patchy one.

Investors are being offered a good deal here if they’ve done their homework, they know they’ll get a safe long-term return on their investment. That return should be measured in single figure ROI percentages, yet commissioners tell me of investors seeking excessive double-digit percentages whilst some “aggregators” walk off with huge commissions.

If the bottom line is all that matters, then you’re dealing with the wrong sector. To the extent that supported housing is “market” it’s a social one, and your social purpose has to underpin your investment. There are some really good socially oriented investors out there and they’re looking for commissioners who need supported housing. There are housing associations that understand what their role should be and providers with the capacity and vision to take on a wider role, for example, direct responsibility for day-to-day and reactive maintenance as well as direct support to residents.

The Role of Housing Associations

Housing associations are a necessary part of the mix here and, in many cases, they don’t actually provide much or any intensive housing management and support to people who live in supported housing (who are their tenants). This is more often done by specialist providers, but not always: some housing associations are also providers in their own right.

There are different types of housing associations. The “REIT” (Real Estate Investment Trust) based housing associations are there to enable local authorities to fully recover from the DWP the enhanced Housing Benefit they claim for supported housing, and to be a regulated presence that should provide comfort to commissioners and others involved in the development of privately funded supported housing.

REIT-based housing associations need to be independent of capital finance providers, not just a vehicle for enhanced revenue. We should be entitled to expect them to manage their finances and conduct their governance in accordance with a social model of operation. They claim significant levels of public funding in the form of enhanced Housing Benefit, which is a personal benefit of their residents. They should make proper provision for the operation of the housing for which they are responsible, including the creation of maintenance sinking funds and other operational costs. They should remunerate their people on the basis of the value they generate within a social market.

The English Social Housing Regulator recently investigated a number of REIT-based housing associations that develop supported housing with the use of private capital and operate on the basis of public revenue (enhanced Housing Benefit). Regulatory judgements were issued on a number of these. Without commenting on specific cases, it seems to me that the Social Housing Regulator may have rightly censured some but did so without publicly identifying whether any individuals involved made significant personal financial gain. To some extent the Regulator may have also thrown the baby out with the bathwater by criticising other REIT-based housing associations that develop and operate very good supported housing and generate significant value.

Community-based or “traditional” housing associations are typically different from REIT-based associations as they’re not primarily vehicles for the introduction of private capital. What I would like to see is a model where these community-based housing associations act to facilitate the introduction of private capital for supported housing and matching enhanced Housing Benefit because they typically have good governance and operational/financial management.

Sometimes community-based housing associations directly manage supported housing, often they conclude Management Agreements with specialist provider agencies to do so. The agency management route is a well-worn path, but not without its own problems. One of the problems with many housing associations is a common failure to provide sufficiently responsive maintenance services. A broken window in a general needs property may not be deemed to be an “urgent” or “emergency” repair, but in supported housing it often exactly that because of the tenants’ additional needs. The provider agency is usually in a better position to deal with responsive maintenance and in my opinion the Management Agreement should allow for this and the maintenance revenue stream should go direct to the provider agency.

Socially oriented private and institutional investors, commissioners and providers in supported housing would very much value being involved with community-based housing associations, which would take a lease on the supported housing properties. Under such an arrangement, community-based housing associations would enable the claiming of enhanced Housing Benefit such that the local authorities that pay it can fully reclaim it from the DWP.

A Management Agreement would still need to be concluded with the provider agency within which the community-based housing association’s role would be minimal: ensuring that occupancy agreements with their tenants are properly administered by the provider agency and ensuring that the physical environment is of an excellent standard without actually doing the day-to-day maintenance, which would be one of the provider’s roles.

The housing association would receive a management and administration fee and possibly an equity share in the properties as well as plaudits from commissioners and others for acting according to a social purpose.

A Call To Action

I’m prompted to write about this having recently been in discussion with social investors and property developers who are looking for community housing associations and provider partners to work with in the development of new supported housing.

I’ve also been asked to help connect providers with people who fund and develop property for use of supported housing.

  • So if you’re a support provider looking for property for supported housing or the capital to develop it
  • A socially oriented property developer/investor looking for a supported housing provider or a community housing association to work with
  • A commissioner who wants to see the development of good quality supported housing in your area
  • Or a community housing association that’s interested in working with a socially oriented property developer/investor to develop supported housing, with or without an agency support provider

Then please get in touch directly with me and I can put you in touch with my wide network of contacts in the provider, housing association, commissioning and investor/developer sectors.

A Few Words of Caution

On a final, if slightly separate matter: if you’re someone who wants me to help you

  • Set up as a housing association/RP
  • Or a supported housing provider using private property in which you have a personal interest
  • Or you want enhanced Housing Benefit for supported housing that you set up without the active support of local commissioners

Then please DON’T contact me.

Please excuse the slightly tetchy tone but it sometimes gets a little tiresome. I publish blog posts and briefings promoting the need for an integrated and social approach to the development of supported housing, and I then get inundated with requests from private individuals whose intentions have much to do with private profit and little or nothing to do with social value.

I have values (see Value Generation above). They’re important to me and to supported housing in general. I work with people who share those values. I don’t work with people who don’t share those values.

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