Council to buy homes with a REIT to tackle homelessness

A London council has announced it will create a Real Estate Investment Trust (REIT) to secure homes for housing homeless people and families.

The council’s strategy involves leasing back 300 properties from the RIT to boost its temporary housing capacity.

The innovative REIT, which is yet to be officially launched, will purchase and lease out residences to the council and non-profit organisations.

The council will now work with a property consultancy to create the REIT.

This announcement comes after London Councils revealed that some local authorities in the capital are facing bankruptcy as they deal with the rising homeless numbers.

‘Reality in a borough on the frontline of the housing emergency’

Cllr Sade Etti, the council’s deputy cabinet member for homelessness and housing needs, told Property118: “We would of course prefer to offer every family who needs it a genuinely affordable permanent home here in Hackney, but relying on temporary accommodation is the reality in a borough on the frontline of the housing emergency.

“In Hackney, we’re tackling the homelessness crisis head on, including upgrading our in-house temporary accommodation and bringing our housing benefits and homelessness teams together to help prevent risk of homelessness at the earliest stage.

“Yet rising rents and growing competition are making securing and retaining affordable properties increasingly challenging.”

She added: “This agreement will guarantee a sustainable supply of good-standard temporary accommodation nearer to Hackney and people’s support networks, helping us support the growing number of households coming to us needing help with housing.

“In the meantime, we’ll continue to focus on addressing the root causes of this crisis, whether by delivering on our plans to build 1,000 new council homes or by calling on the government to reverse the chronic underinvestment in affordable housing.”

Upgraded and integrated into the borough’s housing portfolio

The homes will all be located within a reasonable commute from Hackney Central Station and will be upgraded and integrated into the borough’s housing portfolio for a decade.

The council says the will slash costs by up to 60% relative to current ad-hoc housing expenses and, it says, the REIT is anticipated to attract investments from UK pension funds.

With this financial income, the trust will be able to operate autonomously.

A recent report by the council highlights that the average rent for a two-bed home per month in the borough was £2,600 last year, while the maximum housing benefit that can be claimed is less than £1,600.

Largest in-house temporary accommodation hostel stock

Hackney already has the largest in-house temporary accommodation hostel stock in the capital, but homelessness demand exceeds supply.

The level of demand has seen more than 500 households being placed outside the borough – and some have been housed in Peterborough.

However, one property news site highlights that REITs aren’t without their problems after Home REIT confirmed last December that its properties are worth 60% less than the £977m it originally spent on them – because it struggled to collect rent and saw charity clients go bust over the past year.

Share This Article