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Hyde announces partnership with major investor as it launches Homes England-backed fund
Hyde Group has formed a strategic partnership with investment giant M&G, which has secured £10m from Homes England to support the launch of its new shared ownership fund.
The partnership between M&G and Hyde will see the former fund a £500m pipeline of around 2,000 shared ownership homes.
In the first stage of the partnership, M&G will make a £61m purchase of 422 homes in London and Kent via its new shared ownership fund.
The homes will then be owned by M&G Shared Ownership Fund, which successfully registered as a for-profit provider last year.
Funds received from the shared ownership properties will be reinvested in new homes, the partners said, with a long-term objective to deliver a “net additionality” of shared ownership properties in and around London.
Hyde will continue to manage and maintain the properties for the long term and residents will not see any changes to their shared ownership leasehold agreements, rental arrangements or their frontline services.
The fund will invest in Hyde’s existing stock, as well as forward funding developments.
An initial investment of more than £215m has been secured by M&G’s shared ownership fund from two local government pension schemes, Homes England, two of M&G’s client funds and Hyde.
Homes England said its commitment to the fund is part of its aim to provide investors with greater confidence that housing, including shared ownership, has strong government backing and can play a more prominent part in residential investment strategies.
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It marks the second time that the government’s housing agency has supported M&G after it provided funding for the construction of more than 500 private rental homes, which were acquired by M&G UK Residential Property Fund in 2013.
Peter Denton, chief executive officer of Hyde, said: “Hyde, like all housing associations, faces multiple funding challenges to ensure our homes are safe, decent and sustainable. But we also believe developing new homes is an integral part of our core purpose.
“If we don’t find new sources of funding, we simply won’t have the resources to keep developing at the same rate.
“This is one of the main reasons we want to work in partnership with others and look at new ways of doing things, including whether we own some homes or manage them on behalf of others.”
He added: “This isn’t just about Hyde – there’s a real risk that housing associations will be forced to reduce the number of new affordable homes they build as a result of having to pay for these essential works.”
Alex Greaves, fund manager at M&G Real Estate, said: “We relish the opportunity to work with Hyde and to hopefully grow partnerships with other organisations in time, which will help to make a more speedy, positive impact on the delivery of much-needed housing stock.
“The investment from Homes England also demonstrates how the public and private sectors can work together to bring much-needed investment into the shared ownership sector and increase housing delivery.”
Gordon More, interim chief executive of Homes England, said: “Securing new institutional capital to increase the delivery of new affordable homes is a priority for Homes England.
“Today’s investment is a signal to both domestic and international institutional capital that the government supports sustainable long-term investment in affordable housing to meet the needs of communities across the country.
“M&G has been innovative and successful investing in both market rent and affordable housing. We welcome the opportunity to work with M&G again and to support our strategic partner, Hyde. We look forward to seeing the fund grow and provide access to high-quality new homes.”
Hyde was supported through the process by Savills Affordable Housing Consultancy.
Helen Collins, head of Savills Affordable Housing Consultancy, said: “Today’s announcement marks the conclusion of many months of detailed discussions and resident consultation. We are really pleased to have been able to help Hyde and M&G strike this deal – congratulations to both teams.
“Since we supported the first large-scale shared ownership transaction – selling the 500-home Asset Trust portfolio in 2016 – we have helped a number of landlords review shared ownership stock holdings as more look to release value for reinvestment.
"As many housing providers continue to build and sell new shared ownership homes, it makes sense to dispose of older stabilized stock, to help fund new delivery. The housing provider continues as managing agent keeping continuity of services for the shared owner, while releasing cash for reinvestment – it’s a win–win.”
Update: at 14.15pm, 11.03.21 This story was updated to include a quote from Helen Collins.
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