Octopus joint venture disbanded with no homes built
A joint venture once billed as “potentially transformative” for the housing sector has been disbanded without a single home being built.
The Octopus Quality Affordable Housing (QAH) partnership, forged by £5bn fund manager Octopus Investments and affordable housing developer QSH, has been wound down following its launch in October 2015.
The pair had ambitions to deliver “thousands” of grant-free units, funded by Octopus and delivered by QSH. Octopus said at the launch that it wanted to “transform” the markets it operated in.
Its plan was to both build and own homes for affordable rent and rent-to-buy, while seeking councils, housing associations and other social housing management agents to take on management contracts for the properties.
However, although Octopus provided working capital to run the joint venture, Octopus QAH never got as far as developing an affordable home; the fund manager confirmed that it was unable to source a pipeline of development opportunities.
A source close to the process said: “It didn’t work out so QSH exited the Octopus joint venture by mutual consent in autumn 2016.
“Octopus underestimated the length of time and effort it would take to get things going, and perhaps they were used to seeing a quicker return on their investment.”
QSH was formed by Paul Hardisty, who left a senior role at Birmingham City Council to set up the business, aimed at providing affordable housing without grant. The company continues to operate independently of Octopus. It has an estimated 270 units either developed or under development, with a recent deal signed in Kirklees for 49 units, funded by Harcourt Capital.
Mr Hardisty said: “We agreed amicably to go our separate ways. We’re now in discussions with a number of investors – there are lots of investors who really are the right people.”
He said that QSH was hoping to add 300 to 400 units into its pipeline over the next 12 months.
An Octopus spokesperson said: “We can confirm that Octopus QAH is no longer trading. The pipeline of development opportunities unfortunately did not convert as expected so the decision was taken to wind down the venture.
“Octopus does not currently have any further plans to invest in affordable housing but it’s a market with significant opportunity. We wish the team at QSH all the best for the future.”
