London (Parliament Politics Magazine) – The US private equity company Blackstone has sold more than 3,000 shared ownership homes to the UK’s biggest private pension fund in a £405m deal, the most delinquent by big investment companies in the UK housing sector.
How Will the USS Manage the New Shared Ownership Homes?
The New York-based firm sold the portfolio to the academia pension fund, the Universities Superannuation Scheme (USS), which organises more than £75bn of assets. The sale is one of the largest in the UK housing sector this year, and the biggest involving shared ownership homes since the creation of the shared ownership scheme in 1990.
What Impact Will Blackstone’s Sale Have on Affordable Housing?
The scheme lets people who cannot afford to purchase a home outright get on the property ladder by buying part of it, with the option of receiving the remainder in the future. The scheme is open to people whose household income is up to £80,000 a year, or up to £90,000 a year in London, and if they cannot afford all of the deposit and mortgage costs “for a home that meets your needs”.
Blackstone has been funding heavily in rental and social housing and decided to buy 1,750 rental homes from the housebuilder Vistry for £580m in June. The company has ramped up investments in British housing, gambling on long-term returns in a market where demand far outstrips supply in a long-running housing problem that experts say will take more than a decade to fix.
The new Labour government has pledged to build 1.5m new homes over the next five years, with a priority on affordable housing, in certain social homes, and laid out changes to the planning system.
What Role Does Sage Homes Play in Blackstone’s Housing Strategy?
Blackstone traded the homes via its Sage Homes vehicle, a housing cooperative venture with the private equity investor Regis Group that was launched in 2017. The portfolio, which is found across the UK, consists of shared properties across 250 Sage Homes sites. USS has undertaken Sparrow Shared Ownership, a documented provider of social housing, to manage the homes.
James Seppala, the head of real estate Europe at Blackstone, stated the company had “created an institutional-grade portfolio which has, in turn, enticed more long-term institutional capital into the sector”. He stated the sale proceeds would be invested in Sage to help ease the undersupply of housing in the UK.
“Through Sage Homes, which was founded in 2017, Blackstone has been the biggest provider of newly built affordable housing in the nation for the last three years,” he said. Sage has perpetrated £3.7bn to fund the development of 22,600 affordable rent and shared ownership homes, of which more than 17,000 have been built so far.
Institutional acquisition in UK housing is still tiny compared with the US and continental Europe, and makes up just 2% of the total rented inventory, compared with more than 35% in Germany and the US, according to Savills.