In an unexpected turn of events, rising interest rates and inflation have led to more opportunities for social housing charities, according to a report by Killian Woods in the Sunday Business Post. The current financial climate has dampened the enthusiasm of investment funds towards properties in the private rental market, a trend that has opened up new avenues for organisations like Tuath Housing.
As reported by the Sunday Business Post, Sean O’Connor, the head of Tuath Housing, stated that due to these economic changes, some private investors had decided to put their deals on hold this year in order to review potential returns, with certain capital sources even withdrawing from investment mandates.
Killian Woods reported that O’Connor plans to leverage these developments by initiating negotiations for more properties. However, he emphasised that purchases would only be made if the price was deemed suitable. O’Connor outlined Tuath Housing’s commitment to affordability, asserting that there would be no point in constructing new homes if they were not affordable.
The Sunday Business Post article went on to say that last year, Tuath Housing delivered 256 new cost rental homes. These homes are offered at rates below the market standard, with the assistance of government subsidies designed to enhance affordability.
In order for more projects to be undertaken, O’Connor emphasised the need for reasonable pricing from developer partners and contractors. Tuath Housing’s key focus, according to O’Connor, is to achieve at least a 30% discount on market rents.
Furthermore, Killian Woods reported that Tuath Housing is currently developing 150 cost rental homes, with plans to increase this figure to 200 by the end of the year. It is projected that an additional 63 cost rental homes will be added to the organisation’s portfolio in 2023, which is significantly less than the 256 added the previous year.
As part of an ongoing review, the government is considering providing larger subsidies for the cost rental funding model. According to O’Connor, Tuath has conducted some early modelling of what the government might be planning for the new cost rental subsidy, but this has yet to be finalised.
O’Connor went on to outline Tuath Housing’s ambitious plans for the future. By 2027, they plan to deliver an additional 550 cost rental homes, which would bring their cost rental portfolio to five per cent of their total. On top of that, they plan to deliver a minimum of 7,000 social homes by the end of December 2027.
The Sunday Business Post article concluded with O’Connor stating that they had already signed deals for these numbers, leaving room to seize further opportunities to expand their cost rental portfolio if they arise. For these plans to materialise, however, developers and contractors need to offer reasonable pricing, and the funding system needs to be reviewed.