A national framework for private capital could solve the temporary accommodation crisis

There are many challenges to housebuilding at volume, regardless of the sector or tenure. This is without the question of where the funds to build can be sourced. It is reasonable that private institutions and the public sector should be natural allies, but this relationship is yet to click into place on a national framework.

Instead, what we currently see is a potpourri of different people and organisations trying to figure out ways of working together – whether it’s for-profit partnerships, or not-for-profits trying to bring in grants.

The dilemma is this: housing acquisition and development is an expensive exercise. So, how do you bring in low-cost institutional capital, without falling below the minimum threshold for true risk-adjusted financial returns?

Clearly there needs to be an industry-wide, standardised product. While local authorities will undoubtedly have their own thoughts on what good housing delivery looks like in practice, the public sector and government need to be a part of that process. This might be through grant, guarantees or other structures.

Indeed, the new Social and Affordable Homes Programme (SAHP) has a significant focus on new build, particularly new social rent homes. This is absolutely needed, but it is a mid- to long-term housing strategy that does not address short-term demand.

Similarly, recent announcements on £2.5bn low-cost debt for social housing delivery are welcome, but new build social rent is especially demanding on cost per unit.

Street market acquisition of homes, supported with grant funding, is one such solution. It’s faster than building new, cheaper and relatively straightforward to source with the right help.

The issue arises in the grey area around how much government cash can be allocated to this kind of housing delivery. While local authorities expend time and resources trying to figure out the rules of engagement, private capital could eliminate confusion and delays and help councils meet their legal duty to house people.

There are several reputable institutions who are ready to invest. Social and affordable housing delivery is a noble and valuable ambition, even if it does not generate the same profits as other ventures.

Even more crucially, institutional investors are prepared to be flexible, though their biggest challenge is to design products that do not need to be index-linked, while providing sufficient cover to liability-match their underlying investment funds.

In a nutshell, our sector needs to find a way to pull these pieces together, with the support of private capital and policymakers, to create a standardised, privately funded product that allows for more homes to be created.

In the spirit of the art of the possible, this work is already being undertaken by several organisations who are investing time and resources in this on a much smaller scale. And as a sector, we are getting closer to a successful funding model.

But until there is a single, endorsed product, or a single source of advice for the sector, there will continue to be fragmentation and uncertainty, which will ultimately slow housing delivery below the rate that the country needs.

Maybe the soon-to-be-launched National Housing Bank holds the answer.

Omar Al-Hasso, chief executive, SimplyPhi