Research at JLL

Capital Gains - Affordable Housing Investment Report 

Private investment in Affordable Housing | It has been a challenging few years for Registered Providers (RPs), trying to maintain development programmes in the face of dramatic cuts to grant funding. Government has made clear that this is the new normal, and RPs are responding by identifying private sector funding solutions and new governance structures to rebuild capacity.

about the report

This report highlights the increasing affordability issues facing London's aspiring home owners and explores viable ways for increasing the size of the first time buyer market.

House price inflation has accelerated ahead of wages meaning just 12.5% of London’s 1.5 million-strong workforce aged 22-39 can currently afford to buy an averagely priced first time home in the Capital on their own.

JLL surveyed hopeful first time buyers and found that they will sacrifice space to secure a home which is well located with easy access to transport. 

By taking a more considered approach towards size standards and putting more emphasis on thoughtful design, this report demonstrates how the number of viable first time buyers in London can be doubled.

Meeting the aspirations of would-be first time buyers in London is vital to ensuring the Capital continues to attract and retain the world’s top businesses.

London is in vital need of new housing at affordable levels to meet the aspirations of its 1.5 million-strong squeezed middle. Thoughtfully designed flats around minimum size thresholds can double the number of eligible buyers in the Capital. Shared-ownership is becoming unrealistic in many locations and financial props such as Help to Buy are not appropriate or sustainable in the long-term. Failure to address this challenge will place London's economic future at risk and weaken the societal fabric of one of the key strengths of the Capital's economy.
jll adam challis
Affordable Housing completions
Capital raised
Total capital markets and lease funding to housing associations

key findings

  • 89% of RPs asked are seeking new private finance to support their 2015-18 development programmes
  • Some 76% had a private sector funding requirement of less than £100 million and only one of the respondents had a requirement of greater than £200 million
  • 86% of RPs intend to deliver less than 1,000 units between 2015-18, with one-third planning to deliver fewer than 250 units. Whilst this appears to be funds related, just over half of respondents believe that existing funding arrangements will be sufficient to deliver throughout the next funding round. But the overwhelming challenge from the remaining group is not asset cover or other gearing restraints; it is that current funding will prevent their ambitions from being achieved.
  • 39% of RPs described institutional investment as a welcome new source of capital and 21% felt it is ‘essential to the future of my organisation.’
What is evident is that the Regulator is absolutely resolute in its view that the sector must modernise - and commercialise - to meet growing need. This implies a shift in governance capacity and may ultimately lead to some sector consolidation. Investors were at pains to make clear that they are only interested in engaging for the long-term with a counterparty that is equipped to manage funding sources effectively, but also noted that Income Strips can actually be quite straightforward to structure.
jll richard stonehouse

Adam challis comments

Research - Cih housing report

95% of surveyed Registered Providers (RPs) believe that building social housing is a core part of social purpose for RPs. Only 20% believe that Government feels the same way.

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