Published in Property Week on 13 February 2023
- Launch follows acquisition of s106 Affordable Housing earlier this year
- Fourth new service launched in 12 months following Housing Consultancy, Building Services & Sustainability and Cost Consultancy
- Recent debate by For Profit providers remaining undecided on rent levels highlights complexities
Rapleys has launched a new service to help prospective providers of affordable housing to register as ‘with profits’ providers with the regulator.
Following a change in legislation that allows private companies to form “for profit” housing associations, a number of companies have set up to do so. However, it’s a complex process and can take several years to complete. Companies that want to set up in this way have to demonstrate to the regulator that a company has appropriate policies and procedures and can demonstrate long term viability and a sustainable business model.
For profit providers have different capital structures and cash flow dynamics and are often part of the wider groups of connected companies, rather than standalone organisations, all of which must be reviewed for governance and viability by the regulator.
Simon Corp, partner in the Affordable Housing Consultancy team at Rapleys, said: “While the process of setting up as a “for profit” Registered Provider of affordable homes is complicated, there are some very tangible benefits that make the process worth investing in. The commercial advantage is the ability to acquire affordable housing stock that has been consented through s.106 agreements. In particular, for developers who are required to provide an element of affordable housing in new schemes, they are required to sell off this element to a Registered Provider, but if they set up as a for profit RP they can hold the investment value within their company. This has the added benefits of maintaining control over the entire delivery of the scheme.
However, many developers and investors don’t know how or don’t have the resource to navigate the various elements of this set-up. This is why we have launched our “For Profit” consultancy as a natural add on to our Affordable Housing service offering to guide clients through the relative complex process of registration, encourage more private sector companies to go through the process and, in turn, generate more investment in good quality affordable housing which we are in desperate need of in the UK. “
In the last couple of months there has been debate around if the For Profit providers can adopt the same level of rent inflation caps as have been adopted by the Not for Profit providers. The adoption of a rent cap may have an impact on the long term viability modelling adopted by For Profits providers altering their investors returns and sensitivity assessment to changes in legislative requirements will be a vital part of the registration process.
Rapleys is the market leader for affordable housing services, with a full lifecycle team offering expertise from site finding and acquisition, development and project management, planning, viability, building consultancy and full consultancy on set up, delivery, asset management and exit.