For-profit RPs to treble housing portfolios to more than 80,000 homes by 2028, Knight Frank estimates

Institutional investors and for-profit registered providers are set to triple their portfolios to more than 86,000 homes by 2028, according to a new report by property consultancy Knight Frank.

Data from the Regulator of Social Housing shows the number of for-profit registered providers (FPRPs) has tripled over the past decade to 69 currently operating in the market.

These FPRPs currently own 29,272 affordable homes, representing 0.9% of the overall housing stock.

However, Knight Frank estimates that this figure will nearly triple to 86,000 by 2028, with FPRPs’ market share continuing to grow in the coming years due to increased institutional capital entering the sector and existing players expanding their portfolios.

Knight Frank’s affordable housing investor survey, which polled more than 30 for-profit and not-for-profit providers, found that 77% of leading affordable housing players intend to increase their investment in the tenure over the next five years.

>> See also: Why housebuilders are increasingly looking to set up for-profit registered providers of social housing

>> See also: Grosvenor completes registration of new housing business as a for-profit provider of social housing

According to the National Housing Federation, 145,000 new affordable homes are needed in England each year to meet demand. The NHF says 56% of those affordable homes need to be delivered in London and the South-east.

Several housing associations have stated their plans to scale back their development plans in the short term, due to economic pressures.

According to Knight Frank’s survey, 50% of respondents identified a lack of subsidy or grant funding as the biggest obstacle to increasing supply.

The Affordable Housing Market Update report, which was published yesterday, also found that more investors are looking to the affordable housing sector to meet environmental, social and governance (ESG) goals and engage in responsible investment.

Consequently, the survey found that ESG performance is the most important factor in attracting capital into the sector.

Nearly 80% of respondents in the survey said they are targeting a minimum EPC rating of B on new affordable housing developments and acquisitions going forward.

Most survey respondents indicated that social rent was the preferred tenure, followed by shared ownership and affordable rent.

While survey responses indicated that grant-funded development remains the preferred route to increasing affordable housing supply, followed by Section 106 opportunities, 40% of respondents said that partnerships between housing associations and FPRPs have become more important over the last year.

Paul Hawkey, head of affordable housing at Knight Frank said: “Over the next five years, the affordable housing sector is poised for a transformative shift as investors aim to expand their market share, driven by long-term secure income streams, inflation hedging capabilities, and the environmental, social, and governance (ESG) benefits of delivering affordable homes, as highlighted in our survey results.

“Looking ahead, innovative partnership models that bring together investors and traditional housing providers will be crucial to unlocking new development and boosting supply to meet the nation’s rising demand for affordable housing.”