How This Social Entrepreneur Turned $80 Into A $43 Billion Housing Giant

You’ve perhaps not heard of Gospatric Home, who has no Wikipedia profile, and no photographs on the Getty Image Library; a very low profile indeed, despite creating houses for 250,000 people over the last 57 years. Gos passed away this Easter weekend, aged 87, of health complications following heart surgery. By all accounts he lived an extraordinary, generous and energetic life, frequently in service of others. Career-wise, he fought in Korea in his late teens, became a Major in The British Army, later becoming a Director of IPC Media, and a serial entrepreneur. Not many people know that he quietly turned an $80 investment from friends, aged 30, into a $43billion property empire by 87; becoming London’s largest landlord.

The inspirational Co-founder and Chairman of L&Q leaves a legacy of 110,000 homes, with 100,000 more in the pipeline. We should take time to appreciate the extraordinary impact he has had, as a social entrepreneur, as a philanthropist, and indeed, cultural billionaire.

The benefits of his work will impact generations to come. But the world has not been paying attention. Gos’ remarkable story has suffered from a paradoxical lack of media attention of any kind… A temporary oversight, of great entrepreneurial history. Perhaps too, a reflection of the man’s extraordinary modesty.

Gos and co-founder Rev Nick Stacey did not set up L&Q for money, or for attention. Neither of them became rich from this $multi-billion success. They did it for others.

It seems at first counter-intuitive; that they created a $43billion empire from scratch, by leading with social values over profits. In doing so, they have produced an historic return on investment, which continues to grow apace. It was never about money. It is an innovation story about people. An idea that became an ecosystem. One that puts social impact, people, and long-term interests front-and-centre of business plans. Let’s hope it catches on.

L&Q’s Lean Startup Story

In 1963, co-founder Reverend Nick Stacey, was an assertive 35-year-old, recently-appointed Rector of Woolwich. The job put Stacey in daily contact with local families in urgent need of help. He was a Royal Navy WWII veteran, Oxford history graduate, turned olympic athlete, turned South London vicar. The recurring problems of his parish turned him into a dogged social entrepreneur, and a formidable business partner and friend for Gos Home.

The two young ambitious Founders sought to understand the real-world difficulties of London’s poor and homeless by visiting them in person. On a visit to one homeless hostel, that smelled, ‘like cabbages and stale urine’, a mother showed 30-year-old Gos and Rev. Stacey to the terrible basement where her children slept; her four-year-old girl suffering a rat bite to her cheek. Such were the depravities. This was real London in the ‘swinging sixties’; humiliating poverty, in one of the most prosperous cities in the world. Typically, for middle-class professionals, this scene would be out-of-sight, and out-of-mind. It was evidently a powerful wake-up call for both of them, and a motivation for life. This was the problem to solve.

In 1963, around half a million Londoners were on a housing waiting list.

With it’s legendary slum landlords, failing housing market and failing local government, novel solutions were needed. The pair somehow needed to find a way to help poor families, by buying or building their houses, with money they didn’t have.

Raising seed capital of $80 from 32 business friends, the founders’ mission was to help London’s poor and homeless into better quality housing, one way, or another. Volunteers rallied by Gos and Reverend Stacey set about this, as rank outsiders looking for properties and clever ways to pay for them. They were two ex-military men, seemingly unintimidated by their lack of experience, or lack of funding. Naiveté, determination and a little creativity took them forwards step-by-step to buying the first house, at 2 Wrottesley Road, for $4,300. A bargain. The idea was see if they could make things better, by converting this house as a pilot project for the homeless. They formed Quadrant as a new Housing Association. The property remains a hostel to this day, helping single mothers in need of shelter.

“None of us had any qualifications in housing management. This meant we weren’t stuck in our ways – we were more adventurous. We did everything ourselves in our spare time.” Gos Home

Note that their remarkable efforts were, in these early days, a side hustle. The two founders spotted an opportunity to create 2 or 3 apartments by converting single dwellings, saving thousands of pounds ($tens-of-thousands in today’s money). They found out that they could, as first-timers, find and convert properties into multiple apartments, far more efficiently that the Local Authority could. To do this, they had to bend a few rules. Conversions began without planning authorisation, following the essential startup mantra; ‘it’s easier to ask forgiveness than to get permission.’ If they hadn’t have stretched a few planning rules, they may not have succeeded. We should be glad they did.

Each property has led to more. 57-years after starting this extraordinary journey, the organisation is on track to house an additional 250,000 people (+/- 6% of London’s population), with multiple large developments in the pipeline, such as Barking Riverside; an enormous brownfield site on the River Thames.

Capitalism With A Conscience

Without realising at the time, the Founders launched what would become London’s largest landlord, starting with one modest house conversion, then progressing into house building some years later. L&Q now leads major developments like Barking Riverside, as it’s model for growth. Each new project is designed to have a significant social impact; making money, to pay for social housing.

“L&Q’s business model was, and remains committed to both social and commercial principles”, explains L&Q’s CEO David Montague, who worked alongside the two late founders for many years, himself in awe at how it all began. “It really is an extraordinary story. L&Q is now 57 years old, and that combination of commercial drive and social purpose, it still exists. Those founding social-entrepreneurial values of the Founders are so important.” Culture is evidently at the heart of their success.

L&Q generates substantial profit from building and renting as a developer-landlord. Over 50% of their new-build properties are reserved for lower-income families. $252 million surplus cash was created in 2019; an impressive 21.5% profit: all of it reinvested in new housing. This is capitalism, with a conscience.

As a Housing Association, L&Q follows Victorian predecessors such as The Guinness Partnership, Octavia Hill, and Peabody Trust, that emerged as part of The Industrial Revolution. Ever since British industrialisation, poverty has been highly concentrated in major cities, and it remains a problem to this day, with a growing gap in housing needs. Housing Associations were an innovative private sector solution to rebalance an economy stacked against the poor. They found that it is possible to sustain the subsidised housing model by making new money.

Today, L&Q thrives with a cross-subsidy business model. Broadly speaking:

• 25% of homes are built for outright sale (surplus generating), 25% for private rent (surplus generating), 25% for social rent (subsidised), and 25% for sub-market ownership (subsidised products like shared ownership).

A partnership with the Mayor of London (public funding) helps increase their averages to 60% sub-market homes (40% full market) in inner London.

Cultural Billionaires

While not seeking to make themselves rich from the success of this vast property empire, Gos Home and Nick Stacey, in this writer’s humble opinion, are the definition of cultural billionaires. The kind of billionaires we should be celebrating. The wealth they have created as social entrepreneurs is enjoyed by hundreds of thousands of people, every single day.

Their story is a timely reminder too that there are no qualification-barriers for entrepreneurs, other than those we chose to impose on ourselves. Their story reminds us that enterprise is about solving meaningful problems, as intelligently as you can, through experimentation, trade and repetition. That there is no substitute for action. This is perhaps more relevant today than ever, given the economic and social crisis we now face, from the destructive effects of Coronavirus, and the cultural reset needed to bring our modern economy back to health. We are going to need a good deal of entrepreneurship to turn this around.

Among the most urgent new realities will be deepening housing and refugee crises, requiring a new generation of innovators to step up with novel solutions. We would do well to learn from Gos’ historic entrepreneurial example, as a source of inspiration, as we set about solving these monster problems. Solve them, we must. Remembering too, that enterprise and success is not all about money. It is about solving meaningful problems.