Not For Profit & Profit Housing Collaboration

Guest experts

This week we are joined by Rick Deblaby of Get Living and Paul Hackett of Optivo to discuss the future of collaboration. Can "not for profit and profit companies" work together? Has it become a necessity? David Montague (formerly L&Q) hosts this conversation on behalf of Staykeepers.

Connect with our guests on LinkedIn:

• Rick Deblaby - https://www.linkedin.com/in/rickdeblaby/
• Paul Hackett - https://www.linkedin.com/in/paul-hack...
• David Montague - https://www.linkedin.com/in/david-mon...

About the Beyond the Stay Podcast

We explore all things build to rent, student accommodation and the private rental sector. From overcoming challenges, to bettering the industry and future predictions with leading guest experts.

Full Transcript

[00:00:41] David Montague: So hi everybody, I'm David Montague and today I am joined by Paul Hackett, chief exec of Optivo, a leading not for profit housing association and also, Rick Deblaby, who is the chief executive of Get Living, a build to rent company, and also ex non-exec of a not-for-profit housing association.

[00:01:02] David Montague: The subject that we're going to be talking about today is the relationship between not-for-profit housing associations and for profit organisations as well. I'm going to say a few words of introduction, but then I'm going to hand over to Paul and Rick, because what is most important in this session is that we hear from those people who are in the frontline of delivery , but first, a few words from me.

[00:01:22] David Montague: So since the 1988 housing act the not-for-profit housing associations have been the main providers of social housing and that 1988 act revolutionized the way that housing association delivery was financed and it led to an exponential growth in the delivery of new social housing more recently. In fact, 20 years later, the 2008 housing and regeneration act created these new kids on the block the for profits, housing associations.

[00:01:52] David Montague: And they've been picking up ahead of steam since then, or at least there appears to be a lack of trust between for profit organizations, including for profit housing associations and the not for profit housing associations and reluctance to work together. But I think that is beginning to change.

[00:02:10] David Montague: Why is it beginning to change? Because the not-for-profits have got new conflicting priorities. On the one hand, they've got to deliver safety for their existing residents. They've got to make sure that their existing homes meet the net zero challenge, but they're still ambitious organizations and they wanted to deliver more social housing, but they only have a finite amount of resource and they can only spend it once.

[00:02:33] David Montague: Meanwhile, we've got for profit organizations, which are ambitious, they're funded, they're expanding and crucially, they haven't, they're not held back by the legacy issues that some not-for-profits are currently struggling. So it seems to me that we are beginning to operate in a different world. We're seeing two sectors which have different representative groups, different funding structures, different objectives, one for-profit, one not-for-profit, but perhaps the time has come for both to work together more productively.

[00:03:06] David Montague: Perhaps we are heading towards a, another 1988 moments where new funding. Delivers new supplier through new ventures and perhaps we're facing a new era of social housing delivery. What evidence do I have to support that? Well, we've got the Optivo Sage and then G deals. And Paul's going to be able to talk to us about those.

[00:03:24] David Montague: We've got the high demand G deals. We've got organizations like places for people and other, not for profit housing associations. Managing the stock of for-profit organizations. And so perhaps we're working together already. At the last national housing finance national housing Federation finance conference.

[00:03:42] David Montague: There was a lot of talk about the relationship between not-for-profits and for profits, and their views we're divided. But I think that and itself is evidence that things are moving because it's just a few years ago, views were United and the not-for-profits were United in their view that there was no room for profits within their sector.

[00:04:04] David Montague: We're seeing talk of for profit organizations for profit RPS being created within not for profit groups. And so soon it will be difficult in fact, impossible to distinguish between the two of us. And so I think maybe the moment has come where our worlds are. To collide. That's what matters more is the opinion of the people that have joined me today.

[00:04:27] David Montague: Paul and Rick to bosses of bleeding organizations who are delivering at the frontline in housing. So I'm going to ask both of them to introduce themselves and then we'll get into the meat of this subject. So, first of all, Paul, can you just introduce yourself and your organization?

[00:04:44] Paul Hackett: Okay, thanks, David. And good morning everybody. My name's Paul Hackett and I'm chief executive of Optivo. We're a London-based housing association with 45,000 around London, the home counties and the Midlands. We were formed through a merger in 2017, which is quite a common way that the housing association sector has grown over the last few decades, as associations have sought to create more financial capacity by joining together.

[00:05:07] Paul Hackett: We're currently working with a couple of for-profits that David alluded to earlier on. And certainly we see the world as a world that is changing rapidly. But one thing that hasn't changed is the fact that we are living through a period of great housing need with possibly the worst housing crisis that we've seen since the 1960s.

[00:05:24] Paul Hackett: So certainly we need to think creatively, if we are to do the very best we can to meet housing need.

[00:05:30] David Montague: Thank you, Paul and Rick an introduction to yourself and your organization.

[00:05:34] Rick Deblaby: Yeah. Thanks David. And morning everybody. My name is Rick Deblaby, I'm the chief executive of get living. One of the leading built a rent platforms in the UK.

[00:05:43] Rick Deblaby: Probably the leader of large scale private rented neighbourhoods. We're probably best known for east village at the Olympic park where we acquired from the government, the old athlete's village posts, the Olympic and Paralympic games. But we are now building up a portfolio, not as big as it was pool, but we've got 4,000 operational homes right now, another 6,000 in the pipeline with an aim to get to about 15,000 in the next four or five years.

[00:06:07] David Montague: Okay, Rick, Paul, thank you very much. And Rick, whilst you've got the stage, can I ask you to. Share with us your perspective on the relationship between profit-making and not-for-profits housing associations. How's it been for you? Your successes, your fronts and your frustrations?

[00:06:22] Rick Deblaby: Well, I suspect we'd all agree on the city of faith sort of hypothesis of where we're at. I mean, there's a long term on the supply of housing of all tenures, as you, as you opened up there are strong underlying fundamentals that didn't demand. We're gonna need something like 1.8 million households over the next 10 years which is gonna leave us at the current rate of production, something like 150,000 homeless high solds about over 800,000 overcrowded high solds and probably over 4 million in sort of non decent accommodation. And if you look at the current planning policy and the wider market conditions, the barriers to entry for, for home ownership are really. They're really difficult.

[00:07:05] Rick Deblaby: And I think if you look at land and construction costs, you know, present affordable home provision with that cross subsidy or grant is pretty, nearly impossible to deliver. So At the current rate, even in my world of private rented homes, we're going to have to be producing homes at the rate of about 200,000 plus a year to meet demand.

[00:07:26] Rick Deblaby: So whether you're a profit or a, a not-for-profit, we share the same challenge. And we're all motivated, I think, to do the right thing in producing homes. That's what we all want to do. And I think that the for-profit I'm, the not-for-profit are both driven by a strong sense of purpose and social value being completely interdependent with that ability to generate surpluses.

[00:07:52] Rick Deblaby: And I think even if you operate in the, not for profit sector, You don't earn the right. If you like to fulfill your charitable purpose, unless you are actually making surpluses somewhere so that you can deliver the homes and the experience and the lives. We're all here to try and deliver for those people who desperately need the homes.

[00:08:14] Rick Deblaby: So whether the capital comes from the not-for-profit or the profit I think is a sort of massively subsidiary issue to the main challenge.

[00:08:25] David Montague: Sure. Thank you very much, can I just ask you a couple of questions based upon what you've said, first of all, can you remind us how long has get living been around.

[00:08:34] Rick Deblaby: Yeah. Well, our first resident moved in in 2013 and east village post the 2012 games. So we're coming up for our ninth birthday. Sure.

[00:08:43] David Montague: Okay. Well, the reason I ask is that one of the challenges that is often kind of raised when discussing for profit providers is that they're not going to be around forever with a not-for-profit housing association.

[00:08:58] David Montague: You know, they're going to be around forever. They are never in the words of many, you going to turn their back on the communities. They're not going to make a quick buck. They're going to be there forever. What's your perspective on that? So how can you persuade us that you're in this for the ones from

[00:09:11] Rick Deblaby: I can, because I think if you look at the build to rent sector, In particular, it is now attracting vast amounts of global capital from very long term institutional owners.

[00:09:24] Rick Deblaby: And those long-term institutional owners are attracted to the sector because there is a sort of inflation hedged very secure, granular income and equally that sort of capital comes with, as I said, a bit earlier, a sense of purpose and social value that is interdependent with the objective of delivering surpluses for the pensioners that they look after. So I would say in that sense that there is a pretty strong alignment of interest. Sure.

[00:09:55] David Montague: And could I ask just one final challenge if I may, so. Not-for-profit housing association would say our charitable objectives keep us close to the community. You can depend on our social purpose. How does the purpose of living and other for profits differ and, how can, the people that are watching this podcast? How can they be competent that we share the same? Do we share the same social objectives?

[00:10:21] Rick Deblaby: I guess if you look at a for-profit organization. And if I look at get living, and I know that you know, we provide market homes as well as some level of affordable accommodation. Our whole understanding our philosophy is that our residents can vote with their feet at any time by breaking the lease and moving on.

[00:10:41] Rick Deblaby: And that engender is in us, an incredible sense of sort of customer focus, because unless we're giving people a great experience every day as I say, they can walk with their feet. And so. You know, we have to be front of mind every day. Are we giving residents a great home? Are we providing them with a great service?

[00:11:05] Rick Deblaby: Are we giving them a great community and neighborhood platform on which they can build their lives? Are we operationally efficient? Have we built in really tight, efficient, operationally slick processes that are supported by good tech? Really good data analytics. All driven by people with real talent and commitment and enterprise and, collaborative team spirit.

[00:11:33] Rick Deblaby: And those are all very healthy dynamics to have in the business, because if you don't, if you're not able to choreograph all of those aspects then you're not actually a sustainable in this case, profitable business. Thank you.

[00:11:49] David Montague: Very much a Rick. Paul, can I ask you to share your perspective on the relationship between the, for profits, the not-for-profits and whether you think things are changing and it'd be great.

[00:11:59] David Montague: Also, if you could share with us your, your motivation for working with Sage and LNG as well.

[00:12:07] Paul Hackett: Okay, thank you, David. There's clearly a huge housing crisis out there that needs to be addressed, and there's enough of a crisis to go round, frankly, that we can win. There is space for for-profits and not-for-profits to work both independently and together to tackle the housing crisis.

[00:12:22] Paul Hackett: I think also we bring slightly different skills and capabilities and capacity to the table. So we were quite early in forming partnerships with. A couple of for profits. So energy affordable homes put together, a group of housing associations that were able to carry out the happy management on their stock.

[00:12:39] Paul Hackett: And we were selected through competition as one of their partners. And we found that relationship to be a really positive relationship we're taking. Homes into management. So energy bring the financial capacity, their long-term commitment to building into neighborhoods when we bring our housing management expertise.

[00:12:57] Paul Hackett: And I think it's that combination of skills. That's really interesting that an eight. The residents that live in those homes to receive the same kind of service that an up-to-date tenant would receive, even though the home is owned by a for-profit registered provider. So it's bringing that capital that otherwise would not come into the sector and combining it with housing association.

[00:13:19] Paul Hackett: How's the management deals. And then more recently we formed a partnership with Sage. There's a slightly different partnership whereby we sold part of our development pipeline to Sage with the homes coming across, insert Sage ownership at the point that the homes reach practical completion.

[00:13:34] Paul Hackett: And then the turns move into those homes. And again, the homes of them are managed by Optivo, but owned by Sage. The thing that really appealed to us about both LNG affordable homes and Sage is that both were committed to mixed Tonya. Unlike some for-profits that have wants to offer.

[00:13:50] Paul Hackett: Specifically on one years, such as shared ownership both LNG and Sage really wants to have portfolios that are mixed, including social rent, affordable rent different intermediate products like shared ownership and rent to buy and so on. I think. Credit balance and helps to create the kind of communities that we want to manage and offers choice and opportunity to residents moving into those homes.

[00:14:14] Paul Hackett: So we, we see this as being much more in the future in relation to Sage where the capital receipt that we received from them for disposing of the homes and the pipeline to Sage, we are reinvesting a hundred percent of that back into providing new. Affordable housing. So the thing that makes us deal I think unusual and also hopefully a sign of what may happen in the future is that we're able to build hundreds of homes above and beyond the capacity of our balance sheet and take all of those homes into management.

[00:14:47] Paul Hackett: So if we're building say 1500 homes a year under our own steam on, in our ownership, on our balance sheet, you know, why not build an extra 500 homes? For, for profit registered providers with Optivo managing those homes, the motivation for us is first and foremost to meet housing need. That's our social purpose.

[00:15:05] Paul Hackett: That's what we're here for. And then secondly, to expand our housing management operation across more homes, and then thirdly, from a development perspective, if we are sourcing those deals, then we're buying bigger sites. We're creating bigger communities and the opportunities. So Optivo to own and manage parts of the site and for a for-profit to own the other parts of the site, but for Optivo to provide the unified housing management across the whole site.

[00:15:33] Paul Hackett: So I think there's three factors are very much driving our strategy. I think we're at the very beginning of a change. As you alluded to David, this could be a moment not dissimilar to the ADA housing act, where we could see a really rapid growth in the stock ownership and development by for-profit registered providers.

[00:15:52] Paul Hackett: We don't see that as a threat to the not-for-profits. We see it as an opportunity to meet housing, need to work together and to share complimentary skills.

[00:16:01] David Montague: Well, that's a pretty compelling case you make there. Are you speaking with the voice of the sector or just the voice of Paul Hackett and Optivo?

[00:16:09] David Montague: Do you, do you see the the, the, the, kind of the, the, the, the reluctance, the mistrust that I alluded to, or do you think things have changed?

[00:16:16] Paul Hackett: Well, I think it's important to recognize deals like the deal that we cut with Sage. You're not right for everybody, you know, for every housing association, you need a certain level of capacity in order to to develop schemes of sufficient volume, to put you better sell parts of your pipeline on to another provider.

[00:16:31] Paul Hackett: So a deal like that I think will be replicated, but I think it won't be, it won't be the kind of deal that we replicated by, by all organizations. The, the, the arrangement we have with LNG, where we provide housing management services, there is quite a wide variety of housing associations that are working with LNG.

[00:16:49] Paul Hackett: So it does suggest it's not about a particular segment of the sector, or indeed a particular geography, and that associations can work very constructively with, for profits, where there is that alignment of interests. So but, but I do, I mean, the end of the line question behind your put behind your question really is about trust within the sector.

[00:17:09] Paul Hackett: And, and certainly I think when for-profits started to become active, I think there were concerns. I think people were worried about are these people around for the long term? Is this a, an opportunity to, just to simply you know, acquire stock and then sell it on quickly, but we're not, we're not seeing that.

[00:17:23] Paul Hackett: I think there's a huge wall of money out there. People wanting to liability, match people, wanting to commit funds for the long term and inflation, hedged opportunities like affordable housing do provide those opportunities to long term investors. But I guess my overarching thought really is that for this to work into the long term for this.

[00:17:42] Paul Hackett: Proof of fruitful partnership between for-profits and not-for-profits, we need some to maintain a really good and strong regulatory regime because if tenancy rights are protected. So if your tenancy conditions, your tenancy agreement are the same as if you were the term. A not-for-profit charitable housing association.

[00:18:02] Paul Hackett: If your rent is controlled, according to the same rent regime that, that the regulation affordable housing sets, then I think that we should be much less concerned about the source of capital because those protections are absolutely okay. And I think. System of registering registered providers, which is a rigorous process.

[00:18:20] Paul Hackett: And let's not forget those registered providers will be subject to the same process of in-depth assessment as any other housing association. I think there in lies the protection for both residents and also to hopefully give reassurance to housing associations considering forming new partners.

[00:18:36] David Montague: Thank you, Paul. There's a couple of things that Paul had said. I said, there Rick, that I just wanted to bring you in on and let's just stay with regulation first of all. And so what is the regulatory status of get living? Let's start there.

[00:18:50] Rick Deblaby: Private build to rent a company. So in that sense we're not subject to the regulator for social housing regulations for all of our market homes.

[00:18:59] Rick Deblaby: Point one, our shareholders are setting up a full-profit housing association. That's just getting through the regulator now and it's likely that get living would be managing the assets that fall into that. So when that happens, then yes, we're subject to the same regulation, the Paul, and all the other housing associations are under from the regulator for social housing.

[00:19:21] Rick Deblaby: And we don't have any problem with that for all the reasons that Paul suggested. And I think regulation's a good thing in this case because it actually levels the playing field and it means everybody has to observe the same rules. So, you know, people can't take shortcuts and they can't impair residents safety and, and resident experience.

[00:19:37] Rick Deblaby: But, Paul, I agree with everything you just said. And actually, I think you're probably at the more enlightened end of, of the sector, but going to the point about trust David, which you mentioned earlier, I suspect that. Some of the reason why trust has been eroded is that a lot of the relationships which housing associations have had are with the house bill, the trader developers You do have a misalignment of interest at that point, because one is interested in the long-term receipt of quality homes that they buy three section 1 0 6 agreements or whatever other joint ventures.

[00:20:12] Rick Deblaby: Whereas the other party is interested in a trading profit that to be maximized as quickly as possible. And I think if we moving to an area where. As you've described Paul where for profits and not-for-profit housing associations are working more carefully, there is a much greater alignment of interest because they're both in it for the long term, the both probably have a very similar ideas about purpose and social value.

[00:20:38] Rick Deblaby: And as you say, liability matching what I would observe is that probably. There's probably quite a big range of talent and experience in terms of the non-executives that set on some of the housing association boards. And some of them clearly recruit, you know, commercial people who understand what these deals look like and all of the commercial dynamics that go in them.

[00:21:06] Rick Deblaby: Some of the housing associations, I suspect some of the smaller one. You know, are probably populated by people with a very, very strong sense of the social purpose, but relatively inexperienced in the commercial deals and the financial modelling that goes with these things. And if there is to be some greater collaboration between the profits and the not-for-profits, if there is to be some acceleration of.

[00:21:28] Rick Deblaby: the provision and development of affordable housing of all 10 years then probably the sector needs to attract more experienced, more commercially experienced and unsavvy non-execs to help the executive teams of those housing associations to fulfill all the things Paul that you said.

[00:21:48] David Montague: Thank you. I want to get a reaction from call in a moment, but just.

[00:21:51] David Montague: While, I've got you. Rick are you seeing so suppose I had out a number of examples of really very productive relationships between the Optivo and for-profit organizations. Are you seeing similar partnerships from get living perspective or you, are you kind of successfully developing relationships?

[00:22:10] Rick Deblaby: Ah, well it's early days for us because this is a sort of a Journey courtship that that we're just embarking on that. But I think in the conversations that we've had so far with associations, like Paul's, not Paul's yet. I think we are hearing from everybody, all of the challenges that you set out in your introduction around.

[00:22:32] Rick Deblaby: The diversion of precious housing association equity into building safety and clouding at net zero carbon and bringing existing stock up to decent home standard. And so therefore there is a rationing of where the capital can go. What the, for profits and what companies like get living might bring is that capital.

[00:22:54] Rick Deblaby: At relatively low cost to capital compared to, you know, the trader developers, but also the development expertise, the operational scale and, efficiency that goes to that. Cause as you said ,in your introduction, David do not have the legacy items. You know, the things like the tech stack that we've been able to build, we've been able to pretty much build from scratch and it really does.

[00:23:16] Rick Deblaby: I make the resident experience much easier because a lot of it becomes much more self-serve they can do things 24 7 on their own apps and through other channels into us, it gives us very rich data analytics. So we know much quicker what our residents want from a leaking tap to a change of Shera, to a change, a tendency to making a payment or whatever it is.

[00:23:39] Rick Deblaby: To all the financial dashboards that you need to invest up to, to, to report up to your investors, reports to the regulator and so on. So I, I think. There is a journey to travel and it applies not just to the build to rent sector, but I'm sure it applies across the housing association sector as a whole, that pursuit of really slick, operational excellence and efficiency.

[00:24:02] Rick Deblaby: It's the ones that's facing us as you already know.

[00:24:05] David Montague: Thank you, Rick. I, Paul, I want to get a response on three particular things that Rick has said if that's okay. I mean, first of all, Rick suggested that there is potentially greater misalignment of objectives between the not-for-profit housing associations and the developer house builders.

[00:24:22] David Montague: And yet it seems to me that there has been. There is plenty of evidence of a good working relationship between the two. I'd be interested in your perspective of that. Secondly Rick suggested that that we need greater maturity amongst the non-execs within the sector particularly for those organizations that, that are very much focused on their social purpose.

[00:24:41] David Montague: If they're going to move towards more commercial deals, there needs to be a kind of a maturity and evolution of, governance. But third. And the last, I'll ask you thoughts on is this a kind of legacy IT thing. And so the new for profits are not hampered by legacy in the same way that we are.

[00:24:57] David Montague: Is that the way that you would see it?

[00:24:58] Paul Hackett: Okay. Thank you. Alignment with commercial house documents. I think really it's about horses for courses that are the types of deals and initiatives, where we want to work with a current trader model. House builder. There are other types of deals where we want to partner with a long-term investor.

[00:25:14] Paul Hackett: So the activities that we undertake are, quite diverse. when involved in the real estate market in many, many different ways. So there'll be joint ventures, for example, where working with a house builder and building off the back of their brand strength, their abilities around sales and marketing, their abilities around construction, project management, all add value to housing associations that are looking to place make a mixed tenure schemes that involve a significant amount of open market sale. So it's a way for a housing association to deliver the affordable elements of scheme to have a much more control over the design delivery development placemaking agenda on larger schemes whilst at the same time.

[00:25:55] Paul Hackett: Working with a partner that really has got very strong skills around housing for sale. So I think in scenarios like that, certainly we've got a number of very positive examples and many other housing associations have been involved in these deals for many years now. I don't see there being any chance.

[00:26:11] Paul Hackett: In appetite for that going forward. I do feel we'll see a continuation and frankly, house builders, you know, they welcome these opportunities as well. It supports them with the presale of the affordable with cashflow and, and helping often through the planning process in terms of non-execs. I think the sector is a very diverse set of over a thousand housing associations ranging from small ones that just look after an existing portfolio of housing that don't develop up to those that own over a hundred thousand dollars.

[00:26:38] Paul Hackett: Very diverse portfolios and the skills of execs of non-execs tends to reflect the complexity of the business. And certainly it's an implicit requirement within the regulatory regime that housing associations can demonstrate that they have the right skill mix that matches the. And the risk appetite and the diversity of business streams within those organizations.

[00:26:59] Paul Hackett: So that's a kind of key component within co-regulation that that's a really important factor. And again, you know, looking very positively, we see no lack of appetite , from. Highly skilled people with really good commercial experience, wanting to work with housing associations as board members.

[00:27:16] Paul Hackett: So I think, I do think that will continue into the future. And I think that can only be a good thing with a good cross-fertilization of volunteers. And often when people have come from very, very commercial backgrounds, joining a housing association, Yeah, they really, I think they're often you know, very excited by what housing associations do by a sense of social purpose.

[00:27:33] Paul Hackett: And that feels like a really good coming together as skills on the legacy issue. I think there are two points here. One is the point that was alluded to earlier on about legacy stock. So as housing associations, we're managing large portfolios that contain many different types of stock and that presents one set of legacy challenges.

[00:27:50] Paul Hackett: The legacy it issues as well. I think there is another really major issue. And often , the systems that housing associations used to been developed many decades ago and updated over time. We're not in the place where you'd start, if you would design systems today. And it takes time , to change and adapt those systems.

[00:28:07] Paul Hackett: And, yeah, there's no question that, the technology is an area where. The sector I think will make huge strides over the next few years, as we move beyond, you know, this initial first-generation of corporate technology within the housing association sector to newer approaches that I think will enable us to generate an awful lot more value in particularly around the asset life, life cycle of properties and enabling us to manage and maintain the homes in a way that will generate more value and better services for our patients.

[00:28:38] David Montague: Well, thank you so much. I'm conscious of time. I felt like we could, we could talk forever, but I think we probably shouldn't. And so let me ask you both one more question. Can I ask you to make some predictions about where we will be in five years time? Where will this talk of we will be able to tell the difference between for-profits and not-for-profits , how will the world look different?

[00:28:58] David Montague: Is this another, 19 ETA moment? Reckless career festival.

[00:29:02] Rick Deblaby: Woah five-year time. I think when you're faced with challenging conditions and I think we all accept that the conditions might be about to get more challenging in a post-Brexit post COVID de-carbonizing world, where you've got high bill cost inflation, and I think still continuing challenges around planning.

[00:29:25] Rick Deblaby: Inevitably, you're going to get winners and losers in the whole sector. And you get in those, situations, those consolidation moments. And I would suspect that yes, there will be quite a lot more consolidation, new entrance coming into the sector who will if you like disrupt some of the conventions of the way things are operated, the way things are financing.

[00:29:48] Rick Deblaby: The way things are procured. So yeah, fast forward five years I would be an optimist and say that in challenging situations is the mother in invention and, and we will see some really good operators come through probably more at scale. And maybe the sector will prioritize a little bit more between the really big guys.

[00:30:06] Rick Deblaby: And the niche, small players that, you know, serve a particular local market and for get living, where were you being? Five years?

[00:30:15] Rick Deblaby: We will certainly be double or triple our current size double or probably be triple. At least our balance sheet. We will have a far wider demographic of people living in our homes.

[00:30:28] Rick Deblaby: We will have a wider spread of tenure types and it will embrace some of the rent by products that Paul was referring to earlier. And it's my passionate desire. That will be one of the winners.

[00:30:41] David Montague: I hope so too. Paul, are you gonna be one of the winners?

[00:30:44] Paul Hackett: I certainly hope so. Absolutely. And we'll, we'll hopefully be a 77,000 housing association later this year. If the merger goes ahead. So we're very much looking to position ourselves. I think even if we're looking into the future, it's worth kind of reflecting for a moment on the past and thinking about what's happened since the global financial crisis. So we had a period when you know, banking, finance long-term banking finance pretty much ended.

[00:31:07] Paul Hackett: The capital markets were thankfully there the institutions were there. But provided that funding from the global financial crisis. And it has been a journey already from investment in NHA bonds, through direct ownership of, assets via for profit registered providers. And that has been a journey, but a journey has been characterized by more than a decade of exceptionally low interest rates.

[00:31:26] Paul Hackett: And low inflation. So I wonder, you know, where are we at the beginning now of the period of more sustained higher inflation and higher interest rates and what will that do to investor appetite? That's a, I don't have the answer, but that's certainly a question. This is very much in the forefront of my mind against that backdrop.

[00:31:44] Paul Hackett: I think what we will see is for-profits that are willing to engage in. All 10 years will be the ones that will succeed in grow. I don't think there'll be, I think associations don't want to just stick with say share ownership only, I think that their ambitions for growth will be limited. I think those that really will make a big difference in the sector will be mixed tenure.

[00:32:03] Paul Hackett: I think we'll see a number of those organizations amongst the biggest housing associations within the country. Maybe not in five years, but certainly within 10. And again, that's against the backdrop of what I think we'll see is, pretty rapid HH charitable sector consolidation, as a result of those economic forces that we've talked about and the kind of , the after wash of more austerity in terms of funding for affordable housing, I think we'll probably be seen in the future.

[00:32:30] Paul Hackett: So. There will be a, there will be a shakeout says that there'll be, winners will be winners and losers. And I think there'll be a mixture of winners from within the charitable sector and winners within the for-profit sector.

[00:32:43] David Montague: Thank you very much, Paul. I'm gonna try and bring it to an end here.

[00:32:45] David Montague: And so what I'm hearing key messages. And I think Paul and Rick, you both agree as we all do that, there is a long-term under supply issue here, Paul, as you said, there is enough of the housing crisis to go around. We may have different objectives, but that making of profit, the making of a surplus , is fundamental to both for-profits and profit organizations.

[00:33:09] David Montague: And, and from this discussion more areas of overlap than underlap more similarities than differences. I think what's really interesting is that there is a, there is an acceptance on both the for-profit and the not-for-profit side, that, that regulation is a really important part of ensuring a quality of service and quality of home.

[00:33:28] David Montague: For residents going forward, there needs to be evolution on both sides evolution of governance. We need to make sure that our governance is fit for purpose. We need to be realistic about the challenges and the pace of change. That's, that's heading in our direction, but this is very much a time of opportunity.

[00:33:45] David Montague: And I see it as another 1988 moment. There will be winners. And loses and it is our responsibility to ensure that our residents are the winners. However we deliver in the future, our residents must be the winners. And so Paul, Rick, thank you so much for your time. Fascinating discussion. Thanks also to Staykeepers for sponsoring this podcast.

[00:34:08] David Montague: Hope to see you all next time until then Cheerio.