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REIT moves into Scotland using housing association only registered in England
Real estate investment trust (REIT) Triple Point has expanded into Scotland using a housing association not registered in the country, Inside Housing can reveal.
Last month Triple Point bought 24 units of specialised supported housing (SSH) in south Scotland. It leased the units to one or both of the organisations Hilldale Housing Association and Inclusion Housing but it has not confirmed which.
The Scottish Housing Regulator confirmed to Inside Housing that neither associations are registered with it as a social landlord, though they are both registered in England.
Registration is not required by a landlord to rent out SSH in Scotland.
Michael Cameron, chief executive of the Scottish regulator, told Inside Housing: “Legally a landlord can operate as a social landlord in Scotland only if it is registered with us.
“All other landlords operating in Scotland will do so under Scottish legislation that governs private tenancies. So, an English registered provider operating in Scotland without having registered with us will be operating as a private landlord.”
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Triple Point’s business model involves buying up SSH units and leasing them to housing associations on a long-term basis, in this case 20 years, with the associations making monthly index-linked payments to the REIT.
The model has been criticised by the English Regulator of Social Housing, which said it was “hard to see” how housing associations operating it could comply with its standards on governance and financial viability.
It has declared six of these associations non-compliant, including Inclusion.
A spokesperson for Triple Point said: “Triple Point is providing forward funding to a new build social housing property which has commissioner support from City of Edinburgh Council and which will be leased to an English registered provider.
“The registered provider claims exempt housing benefit as a private landlord for its Scottish social housing properties since housing benefit regulations are the same for England, Wales and Scotland, and registration as a Scottish social landlord is not a requirement of exempt accommodation.
“The Scottish Housing Regulator has confirmed to the registered provider that it does not need to be registered in Scotland to provide social housing there and that it is able to provide social housing under its English registration.”
Inside Housing has contacted Hilldale and Inclusion for comment.
Civitas, the largest social housing REIT, also has plans to expand into Scotland.
In March, Andrew Dawber, director at Civitas, said in an interview with Proactive Investors that demand was “very significant in Scotland and indeed Northern Ireland”. Adding: “What you’ll probably see later on this year is us going into both those markets.”
Asked last month about housing associations attempting to register to operate a lease-based model of providing SSH, Mr Cameron told Inside Housing: “We would need to understand the model being proposed, and that it demonstrated compliance with Scottish legislative and regulatory registration criteria.”
He added that the issues raised by the English regulator would form part of this consideration.
What is a REIT?
A real estate investment trust (REIT) is a company that raises money by issuing shares on the stock market and uses it to buy up property in order to raise income and provide a dividend to its shareholders. REITs generally aim to provide a 5% return to investors.
They are exempt from corporation tax on any profits they derive from their property rental businesses.
REITs have been investing in other areas of real estate for decades but have only become involved in social housing since 2016.
In general, the REITs that have launched in the sector have bought properties, repurposed them to be used as supported housing, and leased them to housing associations that own very few homes themselves at levels of rent linked to inflation.
