The number of for-profit registered providers has more than doubled in five years, according to new analysis by Savills, which shows 64 such providers now exist compared with 31 in 2017.
By 2027, the number of for-profit providers is expected to rise to around 90.
Currently, institutions make up a fifth of all for-profit providers and own 90% of the 20,000 homes under management.
The number of affordable homes owned by these providers is set to rise from 20,000 to more than 140,000 by 2027 – reflecting a total investment of around £27bn.
As housing associations grow more comfortable working with for-profit providers, joint ventures between them are an “obvious opportunity”, according to Savills.
Its analysis predicts a growth in deals involving shared ownership portfolios and also some legacy rented affordable homes.
Helen Collins, head of Savills Affordable Housing Consultancy, said: “Although we now have more than 60 for-profit registered providers registered and active, with a further 60 in the pipeline, we are still in the early growth phase of new entrants to the affordable housing sector.
“For-profit registered providers compare the policy and economic landscape of affordable housing with other investment classes in a way which housing associations and local authorities don’t.
“This fresh perspective creates opportunities to question how things are done and bring innovation – a start-up approach.”
She continued: “As a result, we have seen more interest from housing associations and local authorities coming to us for help in exploring the options for partnership working.
“There is also steep learning curve for new entrants around things housing associations have done for years, such as their deep understanding of regulation and risk.”
Steve Partridge, director, Savills Housing Consultancy, said: “Demand is growing for investments that can deliver on environmental, social, and governance targets as well as financial returns.
“With inflation running high, affordable housing can give investors inflation-linked returns, while delivering energy-efficient, affordable, and well-regulated homes.
“Growth in this sector is limited by the availability of stock, not by investor demand of the availability of capital.”
Image: Helen Collins, head, Savills Affordable Housing Consultancy
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