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Q&A: The evolving role of for-profit registered providers

Zina Smith, Marketing and Communications Manager, Campbell Tickell, asks Maggie Rafalowicz, Director, Campbell Tickell, how for-profit organisations are helping to address social housing need. 

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How are for-profit registered providers (FPRPs) helping address the housing supply crisis?

Legislation to allow a class of for-profit registered providers in England was put in place in the Housing and Regeneration Act 2008 to help address housing supply problems. FPRPs now play an increasingly important role. Unlike traditional housing associations, they don’t have the same degree of challenges with existing properties, allowing them to focus on building good-quality new homes. They also bring different funding sources to the table.

It is estimated that FPRPs will own more than 40,000 homes by the end of 2024, with more than a quarter of these general needs. Some FPRPs are now among the biggest developers of social housing in the country.

While some FPRPs may be backed by short-term players, others, such as Legal & General Affordable Homes and Octopus (through their NewArch RP), are committed to long-term involvement in social housing. We are seeing increasing emphasis on the quality of property management, recognising that building homes is only part of the solution – properties and communities need to be effectively managed and residents need support.

Despite some nervousness about FPRPs, particularly from local authorities, we’re seeing a growing acceptance of their role. This is accompanied by an understanding from FPRPs of the importance of partnership working and a willingness to engage with councils long-term.

What are some of the challenges of collaboration between for-profit and traditional housing providers?

The primary challenge in promoting collaboration between for-profits and non-profits is recognising their shared purpose: to provide affordable social housing.

There is concern though among non-profit organisations about seeing profits going to shareholders, which necessitates clear understanding of what each entity aims to achieve. Finding common ground is critical, despite differences of approach.

Of course, the challenges for councils are by no means just about for-profit entities. There have been many examples where housing associations have not invested in certain areas because it didn’t align with their business plans, leaving local authorities facing difficulties in sourcing social housing and meeting local demand.

FPRPs can bring a new focus and opportunities to the table, but naturally each organisation will have its own priorities in terms of investment and return.

What were the takeaways from the joint event held by Campbell Tickell, Trowers & Hamlins, Devonshires and Social on for-profit providers last December?

This was the second year we have run an event focusing on the relationship between for-profit providers and non-profits. Initially the discussion was about the principle of joint working. At the second event, it was more about exploring joint working initiatives to find mutually beneficial opportunities.

Key takeaways included the importance of sustainability – particularly social housing’s contribution to the ‘S’ in ESG (Environmental, Social, and Governance) for investors. Discussions revolved around how for-profit entities could contribute to sustainability efforts, such as retrofitting, decarbonisation, and ensuring the right homes are in the right places. At the same time, the role of new funding partnerships to improve existing homes was explored. Whether through direct funding or by helping free up the balance sheets of housing associations, partnerships could support retrofitting work and more cost-effective retrofit programmes.

How might motivations differ between for-profit registered providers and non-profits?

Obviously, motivations can differ between non-profits and for-profits. For many FPRPs, the focus might be for a steady, guaranteed income stream. This doesn’t invalidate their contributions to social housing – ultimately, it’s about providing a good-quality home and service.

Passion isn’t always synonymous with quality. Sometimes a less passionate entity can still deliver excellent service. The aim should be to provide quality homes and services and satisfy stakeholders, regardless of the profit orientation.

red hard hat on pavement

There’s a growing understanding of the important role FPRPs play in housing supply. There’s room for everyone in this sector, given the urgent necessity for diverse sources of funding and investment. As long as a good service is provided at a reasonable cost, the type of organisation becomes less significant.

What changes do you see in the registration process, compared to 10 years ago, when Campbell Tickell started registering for-profit entities?

The for-profit housing sector is becoming more professionalised. Previously the registration process was simpler, attracting those who may principally have viewed it as a viable business proposition. However, the landscape is changing. The registration criteria have become more stringent, and the sector is attracting a more diverse range of players. Some are drawn in by the ‘addictive nature’ of social housing – the ability to make a valuable contribution to society. And such individuals are found on the boards of FPRPs, contributing to a different, but effective, operational model.

Regulators, however, are treading cautiously. The profit-making aspect and different funding models have at times raised concerns. The sector’s dynamism is further amplified by the sales of some FPRPs to new owners. This makes regulators nervous, but can be beneficial if the new entity ensures it understands regulation and the sector’s ethos, and is committed to good service. This underscores the need for strict monitoring to ensure the sector’s integrity.

The for-profit housing sector is not just another market. It’s a space where good intentions and commitment to social housing should co-exist alongside profit-making motives. The sector, with its good governance and diverse players, is evolving, reflecting the complexities of the modern world.

What work is Campbell Tickell doing with for-profit providers?

There is considerable activity in the for-profit sector and our work with funds and FPRPs has grown markedly in response to demand. We have been offering support in various areas such as: new registrations; regulatory advice and preparation for in-depth assessments; helping form partnerships with councils, housing associations, and developers; and recruiting non-executives and senior executives.

Currently, we are developing a code of governance for FPRPs, similar to the National Housing Federation governance code that we also developed, but recognising the distinct nature of FPRPs, while demonstrating a commitment to high standards and good governance.

What conclusions can we draw about the for-profit sector space?

There is a significant role for the for-profit sector in the housing industry. In particular the importance of collaboration with local authorities and other housing associations to ensure the long-term maintenance and quality of homes.

There’s a need to invest more in building sustainable homes, which can reduce maintenance costs in the long run. As FPRPs grow, they will have increasing exposure to regulation and non-profit housing associations, and become progressively more integrated into the social housing sector.

This article was featured in the latest CT Brief – Issue 71. 

Images: Anthony Fomin and Ümit Yıldırım

More features:

Campbell Tickell interview with the Housing Ombudsman

Feature: Campbell Tickell chats to the outgoing CEO of Clanmil


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