L&G’s for-profit RP selects 14 housing providers to manage its homes

News20 Nov 2019Luke Cross

For-profit provider Legal & General (L&G) Affordable Homes has selected 13 housing associations and one other provider to manage its properties.

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Legal & General’s new for-profit housing provider selects 14 housing associations and a fellow for-profit RP to manage its homes #ukhousing @landg_homes

The panel – which already manages 300,000 homes in total – includes RHP, Optivo, Jigsaw, Flagship, Karbon Homes, Great Places, CHP, Accord, Stonewater, Regenda, Saxon Weald, Coastline and Raven.

The framework also includes Pinnacle, the affordable housing company that launched one of the sector’s first for-profit registered providers (RPs).

L&G said that the nationwide network of management partners will bring local expertise and the established infrastructure to support its pipeline of 3,500 affordable homes.

Just under 85 per cent of the pipeline is section 106 at present, with the rest being grant-funded and non-s106. L&G expects the latter to grow to a third in the next three years, subject to grant availability.

The investor and insurance firm said it has selected partners with regulatory ratings of G1/V1 that have demonstrated “a commitment to deliver exceptional customer services to residents”.

It means L&G can allocate two providers to each UK local authority, supporting its ambition to deliver 3,000 affordable homes each year.

The investor said the contractual obligations offer certainty of a minimum 10-year relationship, while also “insulating providers from risks such as rent collection penalties”.

The selection follows a two-stage tender process, launched in March 2019, which received 140 expressions of interest.

It said that the new agreements seek to offer “security and a de-risked process to the panel”, meaning members can focus exclusively on service delivery and resident experience.

In July it announced 278 new homes and a contractual joint venture with Coastline Housing, one of the housing associations on its new management framework.

This week, the investor said it hopes to build on the relationships with its managing housing associations by exploring further opportunities, such as collaborating on the direct development of homes.

L&G said it has committed to raise service standards and deploy long-term institutional capital to increase provision “in a sector which continues to suffer from chronic undersupply”.

It aims to deliver a mix of social rent, affordable rent and shared ownership homes, within Section 106 agreements and grant-supported housing.

Ben Denton, managing director at L&G Affordable Homes, said: “With residents already moving into our first schemes, this represents another milestone as we continue to pioneer the institutional registered provider model. There is an urgent need to keep innovating in this sector and to provide quality, stable homes for the 1.1 million households on waiting lists in England.”

L&G told Social Housing that it holds the risk on rent and service charge collection, adding that by taking the revenue risk it insulates providers from service charge fluctuations.

The investor also bears the risk around void works, major works and planned investment.

The RPs, meanwhile, benefit from a 50/50 share of upside gain if they exceed revenue collection targets, and are given a financial incentive if they exceed the customer experience targets set by L&G.

Matthew Harrison, chief executive of Great Places, said that the Manchester-based association will work across 27 different areas.

He added: “Both organisations have a shared vision to deliver excellent customer service, bespoke to individual needs and tenures, and we have a strong track record in successful partnerships, such as in our other high-profile projects like Park Hill in Sheffield.”

Claire Kober, managing director of homes at Pinnacle Group, said that L&G’s entrance into the affordable housing market “is an exciting proposition for everybody committed to increasing the supply of well-managed, high-quality affordable homes”.

She added: “We believe we can make a considerable contribution to their ambition to positively transform customer experience within the sector.”

Hear more about partnerships from L&G, Coastline and others at the Social Housing Annual Conference on 4 December 2019