HCA signs landmark private sector deal
The Homes and Communities Agency has agreed to give funding to a developer to build homes for private rent in the first deal of its kind.
Under the deal with Berkeley Homes the developer will set up a private rental fund that it will use to buy 555 homes it is building over the next two years. The fund, which will be a wholly owned subsidiary of the Berkeley Group, will keep the properties to rent on the open market.
The HCA is putting in £45.6 million through its Kickstart scheme. Of this £28.5 million is equity, £455,000 is gap funding, and £16.6 million comes through the National Affordable Housing Programme. In return for the equity funding it will get a 20 per cent stake in Berkeley’s private rental fund.
Berkeley said the overall investment would allow it to bring forward further phases on 10 of its developments, amounting to 922 homes for private sale, and 299 affordable units, in addition to the 555 for private rent.
The homes for private rent will be in developments across London, the south east and south west, including Kingshill in Cirencester, Royal Clarence Yard in Gosport and Kidbrooke in south east London.
The HCA launched its private rented sector initiative in May 2009 with the aim of encouraging institutional investors into the private rented market. The deal with Berkeley, which was outlined in Inside Housing last month, could form a model for future agreements.
Rob Perrins, managing director of the Berkeley Group, said: ‘The creation of the private rental fund with the support of the HCA is a significant innovation for the private rented sector and will provide high quality homes for open market rent across a number of our sustainable communities.’
Sir Bob Kerslake, chief executive of the Homes and Communities Agency, said: ‘This is exactly the kind of landmark deal we were looking to have associated with our private rental sector initiative.
‘We know that more people are choosing to rent and as well as accelerating the supply of new open market and affordable homes, the creation of a bulk portfolio of homes for rent could be a blueprint for long-term investment in the private rental sector in the future.’