Housing is at the heart of our everyday lives. It binds
our communities, contributes to our wellbeing, stores our wealth,
drives our energy consumption and affects our job and health
opportunities.
The Scottish Government is holding a series of events across the
country to stimulate a broad discussion about housing policy and
the various themes that make up Housing: Fresh Thinking, New
Ideas.
They have set up a website dedicated to Housing: Fresh
Thinking, New Ideas and are looking to this to be the starting
point for your comments, thoughts and experiences of our housing
system. What you think and feel about where you stay, whether
you own or rent, regardless of where in Scotland you live, is
unique to you.
Key figures in the housing sector are looking forward to being
part of the discussion and Weslo's Chief executive, Mike Bruce has
already submitted his blog which is attached
below.
This is your chance to read comments from both tenants and
housing professionals and more importantly this is your opportunity
to add your voice to the discussion - so why not check out
Housing: Fresh Thinking, New Ideas
here.
Invest in Housing?
Weslo Housing Management is a registered social landlord
operating in West Lothian, Falkirk and the surrounding areas.
Started in 1994, the company has brought literally hundreds of
affordable new houses to the sector using a variety of funding
models - some traditional, some less so. The one constant
though, that any development needs, is money and at the current
time more than ever before, there's not enough to go round.
So we're all being asked to use our imagination in 'Fresh Thinking,
New Ideas'. Weslo welcomes this discussion and debate and
will shortly be submitting its response to the Scottish
Government. In the meantime however I wanted to float
publicly an idea we've been trying to promote within the UK
Government for a few months now with the assistance of Michael
Connarty, one of our local MPs.
We know that the Government is investigation the potential for
institutional investment in social housing in Scotland. In Chapter
2 of 'Fresh Thinking...' we learn that Bond funding and
Institutional investment by pension funds and life companies are
two of the alternative methods of fund raising being investigated.
Again, we welcome such radical ideas but would also pose another
option. Why not make investment in the supply of social
housing attractive to individuals? The bond and pension fund
areas tend to work in the tens of millions or even billions. Yet in
Scotland, a social landlord can, in broad terms deliver a 24 unit
development for around £3m. Typically they would require
around 60% of this in grant from the Government, funding the
remainder from private borrowing. So in this example the
landlord would need £1.8m in grant.
Why not from a new fund comprising investment from individuals
who are attracted by the idea of a highly visible ethical
investment which provides the new affordable housing our country so
desperately needs?
The introduction of tax incentives to launch such investment
would, we suggest, make this new form of social investment a
welcome arena for people who like to see their investment make a
difference as well as a profit.
How would they make a profit? Well the investment would take the
form of a transferable security measurable over the period of the
term loan taken on by the landlord to complement the investment and
deliver the housing. The investor can sell on the security market
at any time and release the capital. At the end of the term loan,
the landlord 'buys' the whole portfolio using finance from a new
term loan, thus ensuring the houses provided remain in the
affordable sector and the security holder(s) achieve their return.
How do they achieve a return? Well, this relies on capital growth
in the value of the properties and before anyone reminds us of the
current recession and the downturn in property prices, they would
have to acknowledge that generally over the last 500 years bricks
and mortar have proved to be a fairly sound investment!
The illustration above is admittedly painted with a broad brush
and sure, there will be pitfalls and problems which are not
addressed here. Examples of public work do exist in the UK -
notably in Sheffield which has a history of funding by public
subscription - so we're not starting with a completely blank
page.
So, at a time when the Government is calling for a new spirit of
entrepreneurship to innovate and harness new solutions, it is
should not be beyond the collective ken of the nation to tap the
mother lode of ethical investment and direct a proportion of this
resource to meeting the demand for affordable housing from the
300,000 people on our nations housing waiting lists.
Mike Bruce
Chief Executive, Weslo Housing
Management
www.weslo-housing.org