HCA names key players in private rented scheme
The Homes and Communities Agency today reported ‘several strong consortia’ have emerged in its search for institutional investors in large-scale developments of private rented housing.
The quango said it was now focusing its attention on a small number of funds or consortia ‘which have the potential for both investment and fund management’.
It confirmed that this group of would-be investors in a private rental housing investment fund includes Legal & General and a consortium led by Aviva and CB Richard Ellis.
The HCA also published for the first time confirmation of the support it was willing to offer investors, in the hope of bringing major funds into private rented housing (see box, below).
Speaking at the Resi 09 conference today, HCA chief executive Sir Bob Kerslake said: ‘We have listened to the institutional market, and the message we have received is that we need to develop a number of support mechanisms to assist funds with their seed-corn sites.
‘The housing market has not yet recovered and we have to look at new options. There are a growing number of people who can’t afford to buy right now, but don’t qualify for social housing, and we should be aiming to give them a decent and well-managed rental option.’
Private rented sector initiative support
The HCA said it was willing to offer PRSI funds three forms of support:
- Rental or void support: Under certain circumstances the agency will provide investors with guarantees on minimum returns, or against the possibility of high numbers of un-let homes. But the agency does not yet have the legal cover it needs to offer such support, and is ‘working to achieve that by early 2010’.
- Land: The HCA has created a ‘dossier’ of public land which it will offer to PRSI investors to develop for rental housing. This may be offered as an equity investment in the funds.
- Kickstart: The HCA has briefed bidders for the second round of its kickstart fund, which provides grant and loans for stalled private sector developments, on the ‘opportunity of securing a sale or investment partnership’ with PRSI funds. The bidding guidance for Kickstart Round 2 includes information on the necessary specifications for large-scale private rented developments.
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Readers' comments (5)
susan | 18/09/2009 5:28 pm
Does no one else see whats happening here? Our public taxes are being used to fund private developments with no benefits to the taxpayer. The HCA is suggesting giving away land to private developers for an equity slice of the cake, and yet developments are being bailed out all over the country. We are now going to actually guarantee mininum returns on private investments, and even go so far as to compensate companies for un-let homes.
Wake up and smell the corruption, this country is having a fire-sale of public funds, this proves the bail-out is still going on.
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yvonne | 19/09/2009 4:14 pm
I agreed entirely with Susan's last comment, are we so desperate to create a private rented sector with institutional investors that we are prepared to strip out all of the risk which private landlord's have had for years along with legislation working against them, if so let us hope the deal guarantees the public sector a profit share, better still offer the public land to RSL's who would no doubt develop with the minimum rent and void covered.
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Harry Lime | 21/09/2009 8:50 am
I agree with some of the comments above, however there needs to be recognition that the private renter also needs assistance. There are many on average wages who cannot afford to buy, and if a RSL acquired these sites they would inevitably consist of a large amount of social ret, for which you would have to class as being "in need". Too many private landlords are unprofessional and not guaranteed to remain in the market -refusing to renew tenancies, selling properties from under tenants, missing mortgage payments etc. If the institutional investors had to give undertakings about always renewing tenancies providing rent and behaviour is satisfactory, having agreed rental increase formulas, etc then I would welcome this, but would also want to see the public purse benefit in some way.
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susan wallerby | 21/09/2009 10:31 am
I tend to agree Harry on principle, but my comment was not about renters. The fact is that our taxes are fully funding (I suspect, and am slowly being proved right) all 'Affordable Housing' (Part rent/part buy and social rented). Our so called fantastic private developers and RSL's are in so much financial trouble (mismanagement) that the HCA are bailing them out. Developers who have to provide the 30% Affordable housing are now stalling developments until the HCA agree to fully fund the 30%, and in most cases they are building on ex-public land they obtained for free. Think about it, they whined that they could'nt afford to buy the land as well as fund the 30% affordable housing, the public authorities gave them the land for free, losing millions in investment in the process. The developers then held the development site as ransom until the HCA then comes along and bails out the affordable housing fully funding these homes.
The fact is we are now funding private developers, no risk, and most homes are rented back to the public sector through the Housing Benefits sector, guaranteeing rents forever, they then collude with each other to push up the rents making it virtually impossible for working classes to work in low paid jobs and rent homes. This leaves an underclass of society that doesn't see the benefit in working, when walking away with £10 a week just does seem worth it. Fall ill and that £10 vanishes on pills.
This labour government should be ashamed of itself, they came to power in the early 20th century as a direct result of practises that they themselves are fully endorsing now. Private enterprise with no shackles, no oversight, no regulations will eventually burn everyone, and when they mess up, we are so deeply entrenched in their foul practises we are then told we must bail out our free-market economy.
A free-market economy, what a joke. Privatise the profits and socialise the losses.
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Peter Pan | 14/10/2009 11:37 pm
You are all wrong.
The private rental sector makes developers land values and profit smaller because the private rented sector has a lower value than owner occupation value. What the HCA is trying to do is re-start construction (not development = speculation) as the sector is totally paralized and the UK has a shortesh of housing (therefore unsuitable housing and poverty).
By re-starting development through institutional funding, it creates jobs and prosperity. Also, councils can attract young professionals (24 to 35 year-olds) with a stable income to run-down areas, thus regenerating and re-vitalizing of the area and re-activating of the local economy.
Finally, the private rented sector provides a controlled platform against the current private and segmented buy-to-let market, who exploit tenants.
All in all the benefits of this new sector are without a doutb indisputable.
Thank you!
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