UK Affordable Housing Market Targeted by Behemoth Property Investor Blackstone
By Alexander Reed @ Real Estate Daily
January 18, 2018

Blackstone is one of the world’s most substantial private equity funds and runs the largest residential landlord in the United States. Now the behemoth fund is branching out to the UK affordable housing market, announcing they will fund Sage Housing Association.

Key Takeaways

  • Blackstone is one of the world’s largest private equity funds
  • UK social housing association Sage just gained funding from Blackstone
  • Sage runs a for-profit operation to buy affordable homes from private developer
  • Blackstone is targeting a net yield of 5%

Brief

One of the world’s most prominent real estate investors is entering the UK housing market. Blackstone, which has an asset base of almost $400 billion, announced they are funding Sage Housing Association. Sage is a for-profit social housing association that could make major waves in UK housing with Blackstone funding.

Sage Housing, according to its website, has provided homes for “over 100,000 families across the public and private sectors”. Sage has been registered as a housing association for seven years, but all its directors and CEO were appointed in 2017.

The deal has sparked some controversy in the UK, with social housing advocates criticizing Blackstone and Sage’s for-profit motives. “[Their] purely profit motive is contrary to the social purpose objectives of most traditional housing associations,” said Tom Murtha, co-founder of SHOUT, which campaigns for more investment in social housing, according to Reuters.

“To make the return they need … Sage and Blackstone would increase rent beyond the means of those on low-income, in the greatest need,” he told the Thomson Reuters Foundation. “If they acquired social housing, it would soon cease to be social housing,”

The Grenfell Tower fire, which killed 71 people in public housing, has prompted debate about London’s stark social inequalities and whether neglect of social housing estates played a part in the disaster.

“Residents and communities, post-Grenfell, need to take centre stage rather than large and unaccountable for-profit landlords supported by foreign investment funds,” said Kevin Gulliver, director of the Human City Institute, a think tank. “Grenfell underscored the dire consequences of the marginalisation of social housing and its decline from 33 to 17 percent of housing over the last four decades,” he said in emailed comments.

On its website, Sage said that it has provided homes for 100,000 families in England and “partners with developers and managers from across the residential market, both public and private, to increase the supply of quality affordable housing”