Amid predictions of growing uncertainty in the housing market and increased demand for private rented accommodation, Sovereign Housing Association has continued the diversification of its property portfolio with the acquisition of 84 homes in Bristol, Swindon and Gloucester to let at market rates.
Sovereign, one of the largest providers of social housing in the South and South West of England, offers a range of tenures, and the decision to venture into the area of market rent shows its willingness to meet a variety of housing needs, especially given the current climate in the housing sector.
Recently, Hometrack reported that against a backdrop of economic uncertainty, housing turnover was set to hit a 40-year low. This followed an earlier report in which the real estate services provider Savills forecast that rising demand from those unable to buy their own homes would result in private renting accounting for one in five households by 2016.
A first 34 homes in Bristol and Tewkesbury were bought by Sovereign Living Ltd, the trading arm of Sovereign Housing Association, in December 2010 and quickly rented out. A second tranche of 50 units at five sites in Bristol, Swindon and Gloucester, ranging from one-bedroom flats to three-bedroom family houses, was purchased in June 2011.
Those units that have been completed were let within an average of two months of practical completion.
James Gibson, Regional Development Director at Sovereign, said:
"This has been an excellent investment opportunity for Sovereign, made possible by the secure financial footing we are on and our businesslike relationship with commercial developers.
"We identified a gap in the market and these homes have been let very quickly, due to the increasing demand in the private rented market and the high quality of the units we purchased.
"Sovereign is developing a more diverse portfolio of properties, and offering a variety of tenures to a broader range of people. But we are also diversifying our revenue streams, which helps to guarantee our longer–term financial security and allow us to continue providing affordable homes into the future.
"Given the uncertainty in the housing market as demonstrated by the Hometrack report and the reluctance of purchasers to commit to buying new homes, and in light of the success of our first steps into the private rental sector, we anticipate that Sovereign will make further purchases in the future."