Testing Housemartin’s Sector Resilience

Do you want the good news or the bad news first? Right, the bad news it is.

Tenants in the properties you're lending against are under financial pressure

Most of the properties you're lending against at Housemartin* are tenanted by supported-housing providers.

These tenants are usually charities whose income is partly from government subsidies and fees, and partly from the subtenants they serve who are housed in the properties.

The subtenants usually pay their rents to the supported-housing providers through their Universal Credit (which recently replaced Housing Benefit).

But with local authorities under considerable financial pressure, there are slightly fewer supported-housing units now than 20 years ago despite much greater demand.

There’s rising homelessness due in part to not enough accommodation that comes with additional care, support, or supervision services to help residents live independently.

Local authorities have cut funding for supported housing repeatedly – even while the cost of housing has been rising.

It's remarkably rare for the Care Quality Commission (CQC) to actually force housing providers to shut down as a result of poor quality of care. It's equally extraordinary if the CQC or a local authority shuts down a supported-housing provider for financial reasons.

Simply put: local authorities have an urgent need for them.

And yet these are unusual times. Many providers have by themselves been closing down some of their own schemes, and they intend to close down more throughout this year.

The type of urgent, emergency funding that the industry said it needed last year did not come with the Chancellor's Autumn Budget. A survey by the National Housing Federation had found that, without it, 56% of providers would need to close down some of their housing schemes.

22% even said they might have to shut all their schemes down. They have nearly 40,000 homes between them out of about 600,000 total supported-housing units in the UK.

How that bad news has impacted Housemartin lenders directly so far

Nacro, one of Housemartin's providers, closed down three supported-housing schemes due to financial pressures on the two local authorities that were funding them.

That left four Housemartin properties untenanted for a little while, although this resulted in just some loss of interest for lenders.

Furthermore, Housemartin had just approved its first deal and had a property lease signed with a new supported-housing provider – when that provider went bust.

This left lenders hanging until Housemartin could find people to fill the six two-bedroom flats in that property. In the long run, lenders shouldn't feel that temporary problem too much in their wallets.

Now for the good news

Clearly, the pressure is not good for providers in this sector. But some are in much better condition than others.

Looking at the 2025 accounts for the biggest four providers that partner with Housemartin for supported housing, I continue to find that three of them are remarkably stable. Indeed, they are a mirror image of the struggle to keep schemes open elsewhere.

The fourth has been having a relatively rough time, but it has a long runway to make a course correction.

Here are more details on each of them:

Golden Lane Housing

Golden Lane Housing is by far Housemartin’s biggest partner both currently and historically.

There are 29 outstanding Golden Lane Housing loans, each against a single property, totalling more than £10 million. These are currently paying an average 7% to lenders.

Golden Lane Housing plans to continue to grow its portfolio to 3,000 units, despite focusing on the type of client that is supposed to be hardest to get government funding for at present: people with learning disabilities and autism. A survey of its clients finds that 79% are happy overall with Golden Lane Housing.

Yet it continues to stay easily in the black and with tens of millions of pounds of cash in the bank.

Its rent collection rate has been a virtually perfect 99.7%. Losses from void rent are higher for its supported living schemes, which is what you help them with when lending through Housemartin.

But even when the subtenants living at the properties become unable to claim benefits to pay, Golden Lane Housing still has to pay through Housemartin* from its wider income, which is considerable.

Lets For Life

Lets For Life has had the second-most number of deals through Housemartin over the past 18 months. The lending outstanding is £2.5 million on eight properties. These are now paying lenders over 7%.

Lets For Life is also focused on providing supported-living schemes for people with autism and learning disabilities. In the latest survey using the questions proscribed by the regulator, an excellent 89% of tenants are either satisfied or very satisfied, and none are very unsatisfied.

Its latest accounts show substantial surplus income over costs for its charity, and it intends to grow further. It has a lot of cash for future use.

Due to how it is funded, it's not exposed to void loss from subtenants not paying their rents.

Halo Housing

While Housemartin hasn't concluded any new deals with them since August 2023, there are 34 Halo Properties funded through seven loans on its books, with the total lent adding up to £4.8 million. These are currently paying about 7% to 7.5%.

In addition to people with learning disabilities and autism, Halo Housing supports people with mental illness and physical disabilities. The people living at the properties are scoring Halo Housing at 80% overall. In terms of safety and satisfaction that they're being treated fairly and with respect they are also hitting 80%.

Despite being in a relatively difficult subsector, its last report stated it had a “strong and encouraging year” with “solid performance”. It's been expanding carefully to “relieve the strain on hospitals”, not contracting.

The financial statements, and filings with the Charity Commission, show it maintained a steady surplus of income over costs. I believe it has had no void losses from unpaid rent for at least a few years, probably due to its handling of Housing Benefit and Universal Credit.

Nacro

This is the provider I mentioned in the bad news section with four properties that were left untenanted due to two council closing down some supported housing schemes.

There are ten deals still with Nacro that are live at Housemartin, although the last loan was made back in August 2023 (same as Halo). This totals £3.8 million in lending, and they're currently paying lenders around 7% per year.

Housemartin has told us it partnered with Nacro in supported housing for people coming out of prison, although Nacro also helps care leavers, people who have survived domestic abuse, care leavers and more. Nacro recently had a 75% overall satisfaction score.

Nacro's government funding has just skyrocketed dramatically from 75% of its income to 100%, even as its income also went up by seven figures. It's approaching £100 million in income now.

Yet, it's perhaps been very, very slightly loss-making for the past three years, in terms of its operating income – mostly from both central and local government funding – being a tick outweighed by a combination of its operating outgoings and large interest payments each year related to its pension scheme.

In its latest accounts, Nacro repeatedly mentioned the current local authority financial problems and sector challenges. So it’s “planning” to lose money in its current financial year, due to cost pressures. It specified substantial increases to employer National Insurance contributions from April last year as the main culprit.

Its rent void losses are high, at 15% of its rental and service-charge income, even though this should largely be funded by the government. Nacro appears to consider lowering these losses to be important for its future.

However, it's got over £10 million in cash (and cash equivalents) after debts, excluding long-term defined-pension liabilities. Due to those assets, it doesn't at all look like it’s going to collapse any time soon and likely has plenty of time to adjust.

The bottom line

Keeping track of the risk of funding and regulatory changes, and how they impact the providers they have partnered with, is one of Housemartin's key jobs – and yours as the lenders and 4thWay's as a research service. The other most important factor is how well those providers are doing financially.

While there are never guarantees, the intense need for more supported housing seems to be keeping the providers that Housemartin has partnered with going strong, on the whole.

Still, the instant collapse of the new provider Housemartin had just vetted means some caution is required.

Housemartin needs to be prepared for some more supported housing schemes to close. With just a few months' notice, providers are allowed to notify Housemartin of closure through a tenancy break clause if any individual scheme becomes uneconomical for them.

Housemartin would then either sell the property or find another tenant. To help with that, when schemes end, many properties could go vacant at the same time, giving Housemartin a touch of flexibility in when it gets a new tenant.

The properties will continue to exist and have value in a country that is short on housing – as Housemartin has shown through how quickly it has found solutions for the problems that have occurred so far.

Further reading

Read the Housemartin Review.

Visit Housemartin*.