Friday, 16 September 2011

Because there isn't a good enough return maybe?


The Communities and Local Government Select Committee (prop. Clive Betts MP) are asking why large pension funds aren't investing in social housing:

Mr Betts said housing associations represent ‘an ideal instrument’ for pension funds and other institutional investors.

‘I want [social housing] to be something that pension funds and other institutions invest in,’ explained Mr Betts. ‘I very much want to hear evidence on this issue. We want the people who have the money to tell us what they want to invest in.’

I agree with Mr Betts - pension funds have been very reluctant to invest in residential rent opportunities of any kind but - and it's a big but - now they're interested in the sector, why on earth should they invest in social housing with rents at £300 per month when that can invest in market rented property at £1,200 per month?

The reduction (virtual removal) of grants for social housing and the structure of rents makes the social housing sector unattractive as an investment.  Perhaps we should be looking more closely at the way rents are determined - perhaps through a housing allowance system rather than the setting of artificially low rents? That would make such investment very attractive given the current housing market pressures.


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