For-profits: Building teams and homes that deliver value

25 July 2022

The impact of the housing crisis is everywhere. From the increase in both young families and older people trapped in unaffordable privately rented homes, to increasing homelessness that scars our society. Unless we act now, we face a future in which a generation of young people will be trapped renting privately for their whole lives.

Of course, I’m not telling you anything you don’t already know here. Huge programmes and targets have been set by government, charities and associations in a bid to tackle this. Alongside this we’re increasingly seeing the private sector enter into affordable homes and this is anticipated to have a huge impact on the sector.


The rise of for-profit

There are now over 65 for-profit housing providers that are currently registered with the English regulator, and it’s estimated that around 25 new providers will enter the market by 2027.  According to Savills, existing providers are estimated to deliver 114,000 new homes, while new entrants will add a further 30,000 homes. In total the new homes are estimated to represent nearly £27bn in new investment in affordable homes.

There’s a range of for-profit providers: From providers backed by institutional investors or private equity to independent companies, investment is coming from various parties who see not just the social, but the financial value of such schemes.

The sector is still in its early growth phase and we’re seeing innovations from organisations that show great promise of delivering much-needed growth. For example, Octopus has recently entered into the affordable homes sector by providing development finance to exiting key providers, where the new homes developed will be owned by Octopus’s own housing association.

I recently spoke with Investment Director at Octopus, Peter Merchant, who backs this. There’s an acknowledgement that the housing crisis is too big a problem to be solved by not-for-profits alone and with an attractive proposition for investors, there’s very much a place for for-profits to help drive efforts.

It’s a much-needed boost for the affordable housing sector which has been stuck in a rut for decades with providers viewing policy and the economic landscape with an entirely different lens to housing associations and local authorities. The fresh perspective creates opportunities to challenge how things are done and bring innovation across all aspects of the sector.


How can for-profits thrive?

The new perspectives being brought in must be balanced with the deep knowledge base of people who have worked within the not-for-profit sector for years. Organisations need to ensure they’re tapping into this when building teams. Challenges may come where people from the not-for-profit sector are not open minded enough, or perhaps not commercial enough, to work in this  environment, Equally, there’s risk for new providers who chose to ignore the expertise of not-for-profits. So ensuring you get that blend, bringing a diversity of thinking, is crucial.

We’re increasingly seeing people acknowledge the for-profit sector as a positive contributor to the housing sector and people are more willing to explore opportunities in the for-profit sector. Organisations should be exploring all options when it comes to bringing leaders in.

At NSCG through the different practice areas we are able to help clients shape organisational structure – this is particularly helpful to new entrants into the market. As well as our executive search, interim management and assessment & development capability, NSCG is able to lift the lid on talent challenges, through our talent intelligence team.

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