There is one rule we will always apply, however: we will only ever work with organisations that share our values, and that are looking to invest for the long term and in something that does good. We’ve said that we want investors to have “skin in the game”, so they are committed to the same exposures as us – and that there must be a full alignment of interests. But we have no qualms in working with other people’s money to meet our social purpose – and to do more to meet need, for today and tomorrow.
We remain stewards of social housing, but we will be open-minded about who pays for new homes and whether we own them, or manage them on behalf of others. We want to see both providers and their investor partners work under the same regulatory framework, to ensure the same decision-making and outcomes are delivered.
We also believe that we can learn from new partners and continue to improve the quality of the homes we build and the services we deliver.
As we set out in our inaugural ESG report recently, we see ESG as a way to attract the right kind of investment and select the right kind of partners, as well as demonstrate how associations add value and make a positive impact.
It’s within these ESG parameters that Hyde agreed a new strategic partnership with M&G – one of the biggest investors in UK social housing – with plans to deliver 2,000 new, high quality, environmentally sustainable shared ownership homes for the future. We believe that what we can deliver together will drive innovation in product and customer service. And crucially, the model will look to bring in new, responsible capital via the sale of existing stock, with us recycling the capital we receive from M&G to deliver new homes. In its first raise, the M&G Shared Ownership Fund attracted more than £215m of initial investment from two local government pension schemes, together with Homes England, and two of M&G’s client funds, alongside Hyde.
The shared ownership homes will be owned by M&G’s for-profit registered provider (FPRP) and remain in the regulated social housing sector. The FPRP is required to meet the same standards expected of other RPs under the regulatory framework overseen by the Regulator of Social Housing.
“Having a for-profit entity allows us to deliver more housing and do things we couldn’t do previously, such as tap into equity capital and avoid raising more debt”
This won’t be the last time we work with a for-profit RP model. We believe that FPRPs and not-for-profit RPs can come together for the common good, with the potential to unlock another form of partnership that can help address housing need.
At Hyde, we have just established the sector’s first FPRP owned by an association, called Halesworth, named after the street where Hyde bought – and still owns – its first house. Having a for-profit entity allows us to deliver more housing and do things we couldn’t do previously, such as tap into equity capital and avoid raising more debt.
We’re entering new territory, and I appreciate that some in the sector will feel uncomfortable. The question I would pose is this: how can we do more as a sector? There are no simple answers. Forging new partnerships in the right way is certainly one of the solutions.
Peter Denton, chief executive, Hyde Group