Hyde seals 2,000-home development deal with M&G

Hyde has agreed a deal with institutional investor M&G to fund a £500m development pipeline to construct 2,000 homes for shared ownership.

The deal, supported with £10m of funding from housing quango Homes England, will see M&G set up a shared ownership fund for investing in new development, which it says has already attracted £215m of investment from two local government pension schemes and two other M&G clients.

The first act of the M&G Shared Ownership Fund, which registered in 2020 as a “for profit” social landlord, has been to spend £61m buying up Hyde’s stake in 422 existing shared ownership homes, which will be owned by the fund but continue to be managed by the housinbg association.

Hyde chief executive Peter Denton (pictured) said the move was designed to bring in new sources of funding to boost development of affordable housing. The cladding crisis has forced associations to divert resources in to their existing stock.

The 422-home initial purchase is in addition to the development of the 2,000 homes that the fund is expected to finance.

Denton said: “Hyde, like all housing associations, faces multiple funding challenges to ensure our homes are safe, decent and sustainable. But we also believe developing new homes is an integral part of our core purpose.

“If we don’t find new sources of funding, we simply won’t have the resources to keep developing at the same rate. This is one of the main reasons we want to work in partnership with others and look at new ways of doing things.”

He added that there remained a “real” and “urgent” shortage of affordable homes: “This isn’t just about Hyde – there’s a real risk that housing associations will be forced to reduce the number of new affordable homes they build, as a result of having to pay for these essential works.

“We mustn’t allow development to stop when there is such a shortage of affordable homes.”

Alex Greaves, the fund manager at M&G Real Estate, said the firm was also looking to grow similar partnerships with other housing associations. The venture comes after M&G set up a £1bn UK Residential Property Fund in 2013 to invest in the private rented sector, which was also supported by Homes England.

Gordon More, interim chief executive at Homes England, said: “Today’s investment is a signal to both domestic and international institutional capital that the government supports sustainable long-term investment in affordable housing to meet the needs of communities across the country.”