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New £500m fund to help create up to 1,000 ‘flexible rent homes’, says Home Group
National housing association Home Group has set targets of delivering around 1,000 new ‘flexible rent’ homes over the next five years through the new £500m build-to-rent fund it launched earlier this week.
Speaking to Inside Housing, Kitson Keen, head of build-to-rent at Home Group, said that the fund aims to complete 1,000 new homes by 2025, with the final number depending on the location of the schemes brought forward.
On Monday, Home Group announced that it was launching the fund in partnership with asset management giant BMO Real Estate Partners (BMOREP) to accelerate the delivery of a new build-to-rent product called flexible rent.
The 1,000 new homes will be funded through the £250m investment pipeline the partnership has currently secured but it has a target fund size of £500m.
The government’s housing delivery agency, Homes England, has supported the fund and recommended that the Ministry of Housing, Communities and Local Government takes an equity investment in the fund.
Mr Keen said Home Group has spent the past 18 months establishing a pipeline for its new flexible rent tenure and hopes to start on site with at least two schemes this year, which should include at least 400 new homes.
Under the model, which does not require government grant, developers agree with planners a set rental income for an entire scheme. However, the rental incomes for individual flats would be flexible and would change depending on the tenants’ circumstances.
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Mr Keen said the tenure is targeted at “local key workers”, including groups such as retail workers, who are “fundamental to the local economy” but struggle to access housing.
He said: “They are the ones who are really squeezed with little or no access to affordable housing through the housing waiting list but then find themselves in the private rented sector looking for and deserving a better product and better housing solution.”
Mr Keen said that Home Group has discussed the tenure with the majority of local authorities it currently develops in and that schemes are starting to come forward within roughly six or seven council areas.
Several impact investors have already provided money to the fund, including Big Society Capital, an independent social investment institution established by the Cabinet Office in 2012.
Mr Keen said: “By working with institutional investors to deliver this intermediate product it aligns very well with what investors are looking for in this space: those long-term incomes… and impact investment.
“But that also means it allows us to be freed up to invest the majority of our capital long term into the more traditional affordable housing tenures.”
Update: at 09:40 22/01/20 This story has been amended. It initially called the fund a £250m fund. This has now been changed to £500m, as this reflects the target fund size and the £250m relates to the current investment pipeline.
At-a-glance: Home Group’s ‘flexible rent’ product
- The rents are “intermediate” and focused on key workers
- The initiative does not require government grant
- Developers agree with planners a set rental income for an entire scheme…
- …but rental incomes for individual flats would be flexible and would change depending on the tenants’ circumstances
- Home Group plans to deliver around 1,000 ‘flexible rent’ properties over five years
- Schemes are coming forward in around six or seven council areas
