And so could homes for needy
SUPPORTED housing is in a bad way. There are around 330,000 such homes today, but at least 100,000 more are needed, with the same again required over the coming decade, according to independent research.
The shortfall is most acute in two areas – homes for the over-55s, who need some care but can still live independently, and homes for people with special needs, who require support but still benefit from living in their own space.
Many of these people are in hospitals, care homes or temporary accommodation today, which does not help them and costs the UK millions of pounds every single week. But building new homes requires investment, estimated at almost £25 billion by 2032.
Independent Living Reit has been set up to help plug the gap between demand and supply, improving the lives of people in need, saving taxpayers money and generating robust returns for shareholders.
The group, under managing director David Blakeborough, is hoping to raise £150million on the stock market. The company is targeting total annual returns of 7 to 10 per cent, split between a 5 per cent dividend yield and 2 to 5 per cent of capital growth.
Shares are £1 each, the deadline for applications is this Thursday and stock will be available through intermediaries, such as Hargreaves and AJ Bell.
Supportive housing funds have had serious problems in recent years, attracting regulatory criticism for profiteering at the expense of tenants, local authorities and ultimately the taxpayer.
Independent Living is designed to be different. Greedy funds have offered huge sums to developers and demanded rents at a premium of more than 80 per cent to average private charges. Independent Living is slashing developer profits, allowing the company to make rents materially more affordable, while still offering high quality accommodation to those who need extra care.
The new model, developed with the Regulator of Social Housing, has multiple advantages over previous approaches. Residents will be well cared for, taxpayers will save money and shareholders can earn decent rewards while basking in the knowledge that they are putting their cash to good use.
Ahead of the flotation, Independent Living has identified a pipeline of opportunities, worth nearly £550million. Not all will come to fruition, but a quarter are at an advanced stage and the fund should be fully invested within 12 months. Rents are inflation-linked too, which should translate into steady dividend growth for investors.
Independent Living has analysed its contribution to society as well, calculating that, for every £10million invested in the fund, 67 new homes can be built, saving £1.7million annually in accommodation costs and other benefits.