A major funding agreement to speed up the delivery of new homes for private rent has today been confirmed by the Housing Minister.
Savills predicts the number of private renters in Britain will soar by a quarter over the next five years to 6 million people. Home ownership will fall to 59% by 2019.
To try and cater for the increased demand a major focus has been put on delivering more professionally run rental housing, replicating the growing popularity of purpose-built student accommodation. The Government’s Built to Rent fund has sought to speed up this development by offering cheaper finance to companies building new homes for rent.
The development finance deal jointly funded by the Homes and Communities Agency (HCA) and Royal Bank of Scotland (RBS) will see Essential Living create three new developments across the South East.
The three-year facility of £51.6m will enable the construction of schemes in Maidenhead, Archway and Bethnal Green creating 300 homes. The first properties will be available for rent in early 2016.
It is the first time money from the current phase of the Government’s Build to Rent scheme has been used. The initiative has been created to speed up the creation of new homes funded by professional investors.
Essential Living, a developer and manager of homes for rent, has so far been capitalised with £150m of long term equity funding from London-based M3 Capital Partners, which has large ownership interests in student housing and other alternative assets.
All of Essential Living’s developments will feature a wealth of communal spaces enabling residents to host guests in a variety of multi-functional areas. Lounges, dedicated dining rooms, outdoor terraces and top floor amenity decks will allow renters to entertain all their friends making the whole building an extension of their home.
The three developments funded through today’s agreement are the first of 5,000 home pipeline across the South East. Uniquely, they will be designed from the ground up for rent and managed by Essential Living. This places extra emphasis on having quality, well-built properties.
A pivotal part of Essential Living’s brand is offering a greater level of service and security than conventional buy-to-let landlords with an onsite property manager and concierge in every development.
The PRS is the fastest growing part of the housing market and crucial for supporting labour mobility and economic growth. A surge in the number of single-person households and younger renters with experience of branded student landlords means that there is a growing market for a genuine consumer brands in housing.
Darryl Flay, chief executive of Essential Living, said:
“This funding will help us spread our existing equity even further, enabling us to develop our pipeline of 5,000 homes for long term rent quicker. There’s a genuine need for the old-style housing market to be disrupted. Renters deserve certainty, great customer service and above all, the confidence to make a place your home and trust in your landlord. We want people to feel they’re at home the minute they walk in the building and this underpins our focus on creating a new style of living with a host of amenities and shared spaces encouraging community living for today’s renters.”
Housing Minister Brandon Lewis said:
“We’re determined to create a bigger, better private rented sector so I’m pleased that we’re working with Essential Living to deliver newly-built homes specifically for private rent.”
“Thanks to a £51million contribution from our Build to Rent fund and RBS, 300 homes will now be built across Bethnal Green, Archway and Maidenhead for new tenants.”
“Essential Living is the latest company to move into this new and growing market for private rented homes and I hope others follow in their footsteps.”
Phil Hooper, Head of Residential Development for RBS Real Estate Finance, said:
“RBS is pleased to finance the delivery of this first phase of purpose built Private Rental Scheme (PRS) units across three schemes in Archway and Bethnal Green, London and Maidenhead. We are delighted to be supporting Essential Living with these first three schemes alongside the Homes and Communities Agency (“HCA”). We hope that this senior debt support will lay the foundations for delivery of a significant PRS development pipeline.”