L&G registers four new ‘for-profit’ social housing providers

L&G Affordable Homes (LGAH) has registered four new providers with the Regulator of Social Housing (RSH) as it seeks to diversify funding to deliver its 6,800-home affordable housing pipeline.

LGAH, which is aiming to grow its turnover to £775m by 2025, has now registered four new providers in addition to the one it already had.

The RSH said it has approved the registration of a provider for affordable rent, a provider for shared ownership, a provider to attract third-party institutional funding and a provider focused on development.

The move is designed to ensure that a wider variety of funders, who may only want to invest in a particular type of housing, can do so without pricing in extra risk or complexity that would push up costs for L&G.

 “We’re trying to look at what’s the most efficient way of creating funding structures,” said Ben Denton, chief executive of LGAH.

“They have been set up to give us the broadest range of funding options, we will need to be able to continue to grow the business and not be fettered in terms of our growth.”

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Denton said that long term pension fund capital “doesn’t want to be taking development risk”, so it makes sense to separate that activity into a separate provider.

LGAH told investors last month that it is seeking to treble its turnover from £250m to £775m by 2025, and also treble its total annual completions from 1,000 to 3,000. The funding and stock will ultimately be spread across the five for-profit providers.

In an exclusive interview last week, Denton said LGAH is looking to focus more on direct delivery of housing and less on purchasing stock through section 106 planning gain.

He wants to move towards a third of developments being built directly by LGAH, instead of around a quarter as it is currently, in order to more easily ensure quality standards of new LGAH homes. He also said L&G’s modular arm will play more of a role in building stock.

Denton said the five providers will have a “brother-sister” relationship, meaning they are of equal stature in a flat structure. He said he understands they will be routinely assessed by the RSH independently but at the same time.