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Social and sustainable: why owning can be better than renting for supported housing providers

Supported housing is one of the most vital parts of the social safety net, but also one of the least-well understood. It combines appropriate support services with decent, stable homes for people who need some support to lead independent lives – and so saves a fortune on more expensive acute services. The majority of supported housing consists of homes for older people. Another, smaller segment is classified as Specialised Supported Housing: long-term homes for those with serious disabilities that mean they will likely stay in their housing for many years and may involve specially adapted properties.

But there is also a sub-sector known as ‘Transitional Supported Housing’ (TSH) for vulnerable, working age individuals who need a temporary period of support (usually no more than two years) before they return to a fully independent life. This includes a diverse range of groups – from homeless people and those fleeing domestic violence, to prison leavers and asylum seekers.

Because of the diversity of these needs, and the fact that these groups typically benefit from living in conventional dispersed housing, not institutional settings, TSH is largely provided by local or regional charities that really understand their clients’ needs and their local neighbourhoods. It’s these charities that Social and Sustainable Housing (SASH) works with, by helping them to acquire homes to accommodate their clients in. This might sound like an obvious thing for supported housing providers to do – but it’s not actually how the sector normally works. The organisations that deliver support typically do not own the housing in which their clients live. Instead, they have to find properties to rent – sometimes from housing associations, but increasingly from the private rented sector.

This separation between the providers of support and housing makes sense for Specialised Supported Housing, which typically involves an individual living for many years in the same property, with little or no ability to move. If support and housing are combined, that can leave people trapped in a care arrangement that is not working out, because it’s tied to their permanent home. But the shorter residency periods in transitional supported housing (typically, a maximum of two years) make this point less relevant.

Support providers know that the type and quality of housing is central to the outcomes that can be expected for their clients. For example, ex-offenders who find themselves living in squalid properties located in the wrong part of town will find it harder to move on successfully. Unfortunately, finding the right properties has become harder and harder.

Traditionally, supported housing charities would rent properties from housing associations. Housing associations still own about three-quarters of the roughly 200,000 units of Transitional Supported Housing, with the balance coming from the private rented sector. But regulatory and financial pressures are making it increasingly unattractive for many housing associations to stay committed to dispersed street housing, or to client groups with support needs. As a result, some associations are leaving this sector and selling these homes. Over time, the result will be to leave supported housing charities increasingly dependent on private lets – which are typically more expensive, less secure, and often lower quality. Increasingly, support charities find themselves spending more and more time and resources trying to secure rentals of decent homes over which they then have little control. This is why most SASH borrowers already own at least some of their own housing and would like to own more. It gives them control of quality and location. They can then focus their time and energy on the people they’re there to support, rather than endlessly having to juggle a precarious portfolio of rental properties.

But buying property requires capital, which is not easy to come by for the organisations SASH works with. As charities operating in a tight economic environment, they are unlikely ever to generate much capital from operating surpluses. And since most of them are not registered as housing associations, they don’t qualify for funding schemes that government directs through the housing association sector.

Because they are such shrewd entrepreneurial operators, these barriers have not stopped SASH borrowers from buying at least some of the housing they use to deliver support. They have made use of whatever funding has been available, from conventional mortgage financing to one-off grant programmes. But they are also prudent, and know that conventional property financing arrangements carry risks that might be existential for charities with no shareholders in the background.

This leaves many supported housing organisations stuck. They see increasing demand for their high quality services. They would like to increase the stock of homes that they own, because ownership will improve outcomes for their clients and build their own financial muscle at the same time – it’s both social and sustainable.  But they have not developed 30-year track records by taking inappropriate risks in the property market. As prudent operators they are wary of the risks that go along with most conventional financing options. Social and Sustainable Housing was developed to address this very specific gap in the market, by enabling charities to own homes while investors take the property market risk.

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