We chat with property expert Sue Edmonds, the CEO of the socially responsible, not-for-profit property company Capital Letters about their unique offer to Londoners, landlords, and investors.
What is Capital Letters?
Capital Letters is a unique socially responsible, independent, not-for-profit company set up by London boroughs to find safe, secure, good quality affordable homes for Londoners who are experiencing, or at risk of, homelessness.
Since our creation in 2019, we have found over 6,500 homes for our member boroughs, and we are becoming a large-scale landlord and ethical lettings agency. As employee number one back in 2019, I’m really proud of what we have achieved and that we’re making a real difference for London.
You say you’re ‘unique’, what makes Capital Letters unique?
We exist to enable families at the most stressful time in their lives, to find a secure, safe and affordable home. We are the ONLY independent company owned by our member boroughs that offers the services we provide – whether that’s procurement of PRS homes for our boroughs, our property management or rent collection services, our properties as a landlord or our tenancy sustainment service – there’s no one like us with the direct relationships with our member boroughs, and because we are a socially responsible not-for-profit, everything we do benefits London and the people who live in our homes.
If you rent one of our great quality homes as a private renter, when you pay your rent, we’re not taking a great big profit, we are using that to invest in the work we do with London families who are experiencing or at risk of homelessness. Everything we do comes back to helping those most in need.
Why is your work so important?
It’s simple, a home changes everything, and when I say everything, I mean just that. There’s a huge amount of research that says people living in temporary accommodation have worse outcomes in education, health, employment, and financially.
Find someone a secure, safe, good quality affordable home and their life chances increase; education, health, and employment all improve, including the life chances of the children affected by homelessness, and so does their financial stability… and that affects the whole of society.
There is a reduced need for specialist education involvement and social services, and the pressure on the NHS is reduced. They pay more tax and receive fewer benefits, and they have disposable income that moves around the economy and local communities – they support shops, get pensions, invest and the money goes around again. A home changes EVERYTHING!
How does it all work?
Starting with our procurement service on behalf of our member London boroughs, our team finds good quality landlords who want to do something that benefits society. We only accept properties that meet our stringent standards – our mission is to drive up the quality of the PRS.
We make all the arrangements, offering the landlord’s property to our members, who match a family to that property. The landlord gets an incentive payment that they keep, and we advise them on setting up a 2-year AST (Assured shorthold tenancy) (our minimum requirement). We also offer ‘light touch’ tenancy sustainment where our team help the tenants make sure they are receiving all the benefits that they’re entitled to, that way they can pay their rent to maintain their tenancy and afford life too.
Don’t forget that a huge number of people receiving benefits are working, especially in London, but because wages are low, and rents are high they often need their income topped up with benefits.
The rent for those homes is at the Local Housing Allowance rate (LHA) which was designed to cover the lowest 30% of rents in a local market, but in London, as rents inexorably rise, that percentage figure is getting lower and lower, pricing many families out of the market, resulting in them having to stay for longer in temporary accommodation.
We are now becoming a large-scale landlord, through our partnership with Home Safe Housing. Working with HSH we are securing £750m investment to enable us to acquire up to 2,500 of our own safe, secure, good quality affordable homes. Most of these will be offered to our member boroughs to meet our mission to help London households who are experiencing or at risk of homelessness; a small percentage will be let at market rent so that we generate sufficient income to support our mission.
To make sure we offer those homes to the market ethically and responsibly we have set up our own Social Lettings Agency. It’s ethical because we have no hidden fees, we say what we will do and we do it, we are open and transparent, and when we say what the rent is we won’t be taking bids or offers above that rent (which is what is happening elsewhere in the market).
Currently, 17 people are bidding on each rental property in London – it created a rent war, with those who can afford to offer above the market rent; this is one of the key reasons market rents have been rising so quickly, out of the reach of most people. We will not be part of that. We make a return that we re-invest into our work with our members to support a sustainable solution to homelessness; we do not profiteer off Londoners in need of a home.
You mention £750m in investment, why are you working with ESG investors?
Before the change of Government in the UK, due to the supply and demand challenge and the housing crisis, we had already identified that the only way to find more rental homes for Londoners in need was to bring in external investment. It’s not easy, we are, for all intents and purposes, a start-up business. However, our unique position of having a direct tie to our member boroughs meant that we could secure investment with our partnership with Home Safe Housing and offer a return to investors.
We offer huge SROI, as I’ve said, everything we do adds value to society, some is intangible like, well, happiness… other value is concrete; firstly finding a safe secure home for those who desperately need it, by providing a safe platform from which people can grow, enhancing local communities, and the value circulates. It’s why ESG investors are so interested in our work.
Their customers – large fund holders (including pension funds) – and their customers – the people paying money to the funds – are far more interested in ‘clean’ investments which add value, turning away from investments that are (arguably) bad for the world, not just environmental, but social too. And I think there’s a greater understanding of how ‘patient capital’ can be used to do good, where investors are willing to make a financial investment in – for instance, housing – without expecting to turn a quick profit.
We’re working on returns that happen over 40 years, not a boom and bust quickly moving environment. To help people rebuild their lives they need to know that there is time to do that and that their families have a secure future, and that their landlord is in it for the long term.
Everything we do, whether it’s letting, landlord services, or making a return for our investors, always comes back to our mission and the fact that a home changes everything.
To find out how your property portfolio could help change London for the better go to www.capitalletters.org.uk
