Housing agency to set up system that will allow private backers to build and manage schemes

The government’s housing and regeneration quango is to set up a system to allow institutional investors to build and manage social and “intermediate” housing for the first time.

The Homes and Communities Agency (HCA) initiative follows hot on the heels of its push to get financial institutions to invest in private rented housing.

Nigel Hugill, who chairs the agency’s housing finance group, said broad support for the private rented sector initiative had meant the HCA could look at enticing investors into other parts of the residential market. He said: “We’ve got a political consensus about private rental. We are looking to broaden the debate to include these other aspects.”

The former chairman of Lend Lease said money from pension and other funds could be used to build social or intermediate housing with less grant than traditional social housing.

We’re interested in creating conditions for a maximum amount of building

Nigel Hugill, HCA

Hugill said statutory changes may be required so that private institutions could manage social housing and added that questions regarding how the system would be policed remained to be decided.

“We’re more interested in creating conditions for a maximum amount of building. Our single quest is to work out how we can use that [public] money that is made available more efficiently.”

Hugill said social housing was attractive to investors because rental income is linked to inflation, and is backed by the government in the form of benefits paid to tenants.

Andrew Pratt, managing director of residential at Grainger, the UK’s largest listed residential landlord, said the scheme could attract backers. “It’s a secure form of investment and investors may well be interested in it.”