Housing associations shy away from rental, as sales boom

A booming housing market – helped by government incentives – is forcing housing associations to cut back on their plans to enter the private rented sector.

In London and the south east, the impact of the Help to Buy scheme means house prices are rising, and there is greater demand from buyers who can now get on the housing ladder with a minimal deposit.

As a result, several housing associations are cutting back on their private rented aspirations. Affinity Sutton has abandoned plans to build hundreds of homes a year for private rent, reports Inside Housing. Notting Hill Housing Trust and the Guinness Partnership are also reportedly scaling back plans in a marketplace where building to sell can give them a better short term return, than building to rent.

The news is a setback, as last year nine housing associations bid successfully for funds under another government initiative to boost the housing market, Build to Rent. But house prices are rising, and busy builders are hiking construction costs, while land values are strengthening – all making the quick buck of a sale look more attractive.

Keith Exford, the chief executive of Affinity Sutton told Inside Housing: “We took the decision at the beginning of the year that returns on PRS are just not big enough given the risks involved.”

However, not everyone is focused on the short term, it seems. In the last week, Fizzy Living, the private rented company of the Thames Valley Housing Association, agreed a £200 million cash injection from the Abu Dhabi Investment Authority, specifically to invest long term in growing a portfolio of private rented homes in the UK.

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