More than £52 million in public funds designated for social housing is at risk following the partial collapse of Heylo Housing, one of England's fastest-growing housing providers. Two investment companies within the Heylo group, backed by asset manager BlackRock, have entered administration, prompting the government regulator to urgently seek a rescue deal to protect taxpayer money and prevent 3,500 social homes from being transferred to the private sector.
Administration and Financial Exposure
One of the Heylo group's investment pods entered administration owing £46.46 million in unsecured credit to Homes England, the government agency responsible for allocating public money for social housing. A second company owes an additional £6.21 million. Homes England estimates its total grant exposure at approximately £43 million. These grants were awarded between 2018 and 2023 under the shared ownership affordable homes programme, allowing residents to purchase a partial share of their homes while paying rent on the remainder.
The grant is typically recycled when repaid to fund more social homes—potentially supporting around 500 new homes for social rent. However, if a sufficient bid is not made for the stricken companies, this public money could be lost.
Residents Assured, but Future Uncertain
Administrators from PWC have assured approximately 3,500 residents across more than 100 council areas that they will not lose their homes and should continue paying their mortgage and rent as usual. The Regulator of Social Housing (RSH) hopes the homes can remain within the social housing sector if another regulated landlord can be persuaded to acquire the stock—similar to the takeover of black-led provider Ujima by L&Q.
The RSH's powers, including the ability to appoint its own administrators, have historically reassured lenders who have invested a combined £130 billion in the sector. However, the Heylo case presents unique challenges because the part of its structure registered with the regulator does not own the homes involved. Instead, it leases them from six investment companies, including the two now in administration.
Structural Loopholes and Regulatory Concerns
Unlike typical cases, the administrators were appointed by investors—BlackRock, Phoenix Life, and the Universities Superannuation Scheme—not by the RSH. PWC's duty is to protect investor funds, not necessarily to keep homes in the social housing sector, as RSH-appointed administrators would be required to do.
The RSH has raised concerns about Heylo's structure since its founding by Giles Mackay. In 2022, the regulator warned that the arrangement was too risky because registered providers had no control over the homes. Mackay had a similar dispute with the RSH over his previous company, Assettrust, whose investment companies went into administration in 2014 after the RSH raised viability and governance concerns.
Deregulation introduced in 2017 allowed Mackay to acquire an existing registered provider and build a complex structure of investment companies around it. This gave Heylo the benefits of regulation—including successfully bidding for public money—while offering no public oversight over the homes the money paid for.
Call for Reform
According to the RSH, Heylo's current difficulties highlight why this loophole must be closed. Chief executive Jonathan Walters stated: "It highlights the importance of going through full registration so potential issues can be identified early—rather than bypassed through acquisitions. By leasing homes from investment pods, Heylo RP was less able to assess and address risks, and unable to protect tenants' homes when problems developed."
Paul Kershaw, chair of Unite's housing workers and a former regulator employee, commented: "In this situation it's going to be difficult to find a saviour. The structure of the company is the risk for the regulator. Who picks up the tab when things go wrong? The investors, like BlackRock, want the profit when things go well, but they don't want the risk." Kershaw alleged that the regulator faced political pressure to register for-profit companies to boost new home construction, adding: "Heylo shows the risk associated with that approach."
Uncertain Outcome for Public Funds
The RSH, investors, and administrators all hope Heylo's homes can remain in the social housing sector, at least partially protecting the public grant. However, this outcome is far from certain, and some public money may have to be written off. Walters said: "Because the pods own the social homes but are not regulated by us, we do not have a formal role in the administration. But we are working closely with the administrator to support a resolution that safeguards the long-term future of these homes."
A spokesperson for Heylo stated: "The team at Heylo is working closely with the administrators, and our customers remain our top priority to ensure a smooth and orderly transition. As this is an ongoing matter, we are unable to comment further at this stage."
