Has the pandemic rewritten your property investment portfolio yet?

James Hare, Social Housing Disruptor and Founder/CEO of Brik

If there’s one thing we’ve all learnt from the pandemic it’s that we’re all in this thing together and social impact
property investment has never had a more important role to play. Property development start-up Brik thinks it has the
perfect remedy for the slump in investor returns from the property sector and an opportunity to make a huge
contribution towards the health and sustainability of our poorest communities.

If you think we’re just talking about property values and the dire state of our empty innercity property markets, you’re only partially right. Covid’s impact on the property investor pales into insignificance when measured against the lives lost. As we adapt to whatever normal turns out to be in 2021 the astute investor will undoubtedly recoup any losses.
Sadly, according to UK government data, the same can’t be said for those who’ve been hardest hit by the virus: the homeless and those living in substandard housing suffering from fuel poverty.
In the most deprived areas of the UK, where the average wait for social housing can be over 14 years and tens of thousands are waiting to be housed, the Covid death rate was more than double the national average.

The Need is Great
Social housing, good, comfortable homes that hard-working families can afford, have been brought sharply into focus over the past six months. There are over 1 million families on waiting lists for social housing in the UK and according to a study by Capital Economics a further 1.7 million live in substandard or unaffordable private rental properties. Yet,
according to the latest annual figures, only 4,800 new social rental properties were built last year. Why? Because both the large housebuilders and housing associations are leaning on public funding models too heavily and either won’t or haven’t figured out how to build high-quality housing that families struggling on low wages can afford and from which they can return their obstinate and oversized profit expectations.

The Future of Affordable Housing
The reality is that many people are living in houses which should be condemned, largely due to the fact the housebuilders are solely focused on turning huge profits by restricting the development of their land banks and exploiting the funding they’re relying on from government to advance to ill-advised first-time buyers through
schemes such as ‘Help to Buy’. But things are about to change. Brik is building truly affordable, comfortable houses which people will be proud to call home. And here’s the rub – Brik is planning to make a healthy profit from building
them. How? Well, that’s best left to 70s rock lover and Brik’s founder, James Hare, who is convinced Pink Floyd’s seminal piece ‘Another brick in the wall’ is about housing. “Everyone should have a home; safe, clean and secure, a place to grow and live a happy and healthy life with their family” explains James, “Brik’s sole purpose is to build those homes, build them well and in volume. We think it is madness that a property market where demand is outstripping supply by 85% and that is worth over £11 billion has failed the poor and our low paid key workers.

“We didn’t want to go cap in hand to the government to fund Brik, that model just doesn’t work”

The Brick Housing Model
“We knew we could build great homes at the right price and make those homes almost self-sufficient in zero-carbon energy, but we wanted to do it without placing a burden on the taxpayer. The answer was incredibly simple. The homes we build, because there’s such a huge waiting list, are guaranteed occupancy. Which means the future rental income from those properties is also guaranteed and because this is government-regulated social housing, the local
authorities are obliged to ensure occupancy. “It’s not at all like the private or commercial property markets where
occupancy is subject to market forces which will always present a risk to the investor. So we build, ensure energy self-sufficiency – it’s important to us that tenants can afford to heat their comfortable new homes – the local council guarantees 100% occupancy for up to fifty years and our institutional investors buy the future rental income from Brik.

“Importantly, Brik remain the owner of the asset, thereby ensuring long-term security for each and every one of our tenants. Brik really is another brick in the wall for the old government funding reliant approach to social housing.”

“Brik builds the best homes our tenants have probably ever had and our development partner investors walk away with an early exit and market-beating return”

The Numbers Brik plans to build 46,000 homes over the next five years. They will be built in areas of the UK with the highest housing waiting lists. Each development is set up as a special purpose vehicle in partnership with an equity investor who will enjoy a full exit on investment on assignment of the project’s future income, usually well within two to three years. Plans are advanced on a number of projects and Brik are keen to share financial projections on these projects with family offices who share the commitment to creating a lasting community legacy through social impact investment. Investors looking to make a lasting social impact are invited to call James Hare CEO of Brik (you are also free to put James right on his ideas about Pink Floyd!)

Contact James on (+971) 50 764 4765 or drop him a line: [email protected]

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