Social housing as a haven for wealth – The Property Chronicle
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Social housing as a haven for wealth

Residential Investor

With the government under pressure to tackle the UK homes shortage, social housing offers yield opportunities to high-net-worth investors.

As a developer in the North of England dealing in high-volume but relatively inexpensive units, at the start of 2020 we anticipated continuing demand from the same high-net-worth clients and property funds, loosely based on several factors – low unit costs, the Northern Powerhouse, and rental yields that were higher than the overheated South of England. Scroll forward several months and we have unearthed areas of demand that reflect a different landscape of shifting politics and social conditions. That stamp duty holidays and post-lockdown pent-up demand have underpinned prices is well known, but increasingly our attention has turned towards local authority demand for social housing and the subsequent opportunities for funders seeking yield in a seemingly permanent ultra-low interest rate environment.

Social care was a secondary focus of the last election but has rarely been more in the headlines than with the impact of covid-19. The Red Wall conversion of the 2019 election placed huge emphasis on the North – and the Conservatives, having embraced the ‘get Brexit done’ message, now need to retain those votes by providing a longer-lasting reason for what were in many cases multi-generational changes of allegiance. Covid-19 seems, for the moment, to be affecting the North more than the South, and if the Tory government wants to be deemed trustworthy it must demonstrate a corresponding shift in regional support. The Office for National Statistics reported a fall in construction output of 10.6% in the three months to July – the very period when factors driving demand for social housing (abusive relationships, redundancy, rent defaults, deteriorating mental health statistics) were pushed upwards by lockdown.

Residential Investor

About Mark Newson-Smith

Mark Newson-Smith spent his City career trading on the London Metal Exchange working for several banks and hedge funds. Drawing on his contacts from a 25-year career in finance and commodities, he now services high-net-worth clients in the UK and overseas.

Articles by Mark Newson-Smith

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