Octopus Real Estate enters affordable housing with RP acquisition

The investor said that, through the registered provider it has acquired, it will operate a “direct let model – rather than lease-based”. This, it said, is intended to “ensure a fair sharing of risk with its partners”.

It added that buying the RP would make sure the investor was subject to “appropriate regulatory oversight” and would also enable the company to access grant funding to support new homes delivery.

Social Housing has enquired as to the name of the RP, and how many homes it currently owns or manages.

Ms Austerberry, who announced last year that she would retire from her role as chief executive of housing association Moat this summer, will chair the RP.

She said: “Housing associations and local authorities need trusted partners with long-term capital to help them keep delivering new homes whilst they address net zero and building safety costs on their existing portfolios. As a B Corp with strong ESG credentials and a track record of purpose-led, responsible investing, Octopus is the perfect partner. 

“In my discussions with the Octopus team, I was struck by their commitment to addressing the concerns of both providers and residents of affordable housing. Their deep experience as investors and landlords of care homes and retirement villages gave me great confidence in their ability to support this sector. Together, we have ambitious plans and I’m excited for what we’ll achieve in the years ahead.”

Benjamin Davis, chief executive of Octopus Real Estate, said: “We are launching an affordable housing strategy now because the current cost of living crisis is rapidly increasing the already urgent need for quality, genuinely affordable homes. The costs of decarbonisation, as well as the ongoing impact of post-Grenfell regulations, are restricting the amount of new development many housing associations can undertake at a time when delivery needs to increase significantly. We believe we can help solve these challenges together, as long-term partners.”

Mr Davis said that the investors also intend to tackle fuel poverty with support and expertise from Octopus Energy. He said: “In doing so, we’ll be able to fund the development of more energy-efficient homes and work alongside housing association partners to improve the energy performance of existing homes, reducing residents’ fuel bills.”

The move is not the first time that investors entering the sector have acquired an existing RP, rather than applying to register their own via the regulator. Previous examples include shared ownership specialist Heylo Housing, which acquired a for-profit registered provider from 3CHA in 2017.

On Wednesday (11 May), Jonathan Walters, chief executive of the Regulator of Social Housing (RSH), told delegates at the Social Housing Finance Conference that he would expect anyone acquiring an existing RP to make prompt contact with the regulator, as an important part of the co-regulatory settlement in place.

Mr Walters was answering a question from a fellow panellist in relation to the potential trading of existing RPs, by investors hoping to short-circuit the usual registration process.

“I think we would really hope that anybody that took on an existing RP would come and speak to us straight away. Co-regulation is founded on honesty and transparency between the regulated and the regulator,” Mr Walters said.

He added that the new look-through powers to strengthen the regulator’s existing economic powers, being introduced through parliament along with new consumer powers through the Social Housing Regulation Bill, would better enable the regulator to see who is the ultimate owner of registered entities.

“One of the things we’re looking for actually in the legislation that’s coming will be more power and more transparency around who actually owns some of these vehicles.”

Earlier this week, consultancy Savills unveiled results of a survey of all 64 for-profit providers currently registered with the RSH, that suggested an increase in stock of 120,000 homes in the next five years – a sevenfold increase from the current 20,000 homes they own.

This would take for-profit registered provider investment to £27bn by 2027.