£3.5 billion funding boost for new rented homes
Financial deal will release cash to speed up the building of new homes for private rent.
Housing Minister Brandon Lewis today (11 December 2014) signed a new agreement to help unlock £3.5 billion in funding to build new homes specifically for private rent across the country.
This new agreement with PRS Operations Limited, a subsidiary of Venn Partners LLP, is important to the government’s wider efforts to create a bigger, better private rented sector.
The government’s private rented sector housing guarantee scheme enables landlords of new rented homes to use a government guarantee to secure long-term financing. This investment will increase the supply of purpose built, professionally managed private rental homes giving tenants more choice of better quality homes.
Initially, up to £3.5 billion in government-backed loans will be made available to landlords looking to invest at least £10 million for new homes available for private rent – with the option to increase this to £6.5 billion in future.
Venn Partners has created PRS Operations Ltd, a new organisation that will secure institutional investment in building homes specifically for private rent. This new organisation will work to arrange up to £3.5 billion of funding – and then offer a series of smaller loans to eligible landlords looking to move into this expanding market.
Building more homes
House building is an important part of the government’s long-term economic plan. Today’s deal with Venn Partners to provide the guarantees scheme is part of a package of investment measures to help generate growth in the rented sector, while ensuring value for money for the tax payer.
These include:
• the £3.5 billion affordable housing guarantees scheme, which has already helped provide over £1 billion in investment to provide over 9,000 new affordable homes, on some of the cheapest terms in the sector’s history
• the £1 billion Build to Rent Fund, which is on track to provide up to 10,000 newly-built homes specifically for private rent across the country
• the Private Rented Sector Taskforce, which has identified aspirations to invest over £10 billion of equity in the private rented sector
Housing and Planning Minister Brandon Lewis, said:
"We’ve pulled out all the stops to get the country building since 2010, including by creating a bigger better private rented sector.
"Today’s deal with Venn Partners will secure a £3.5 billion investment in delivering homes specifically for private rent to ensure a range of developers across the industry get to expand into this growing market.
"This is an exciting and important move that will help strengthen the private rented sector so that it meets the needs of tenants well into the future. But this wouldn’t have been possible without the tough economic decisions we’ve had to make to restore confidence in our economy, and it’s this strong record that has unlocked this funding."
Danny Alexander, Chief Secretary to the Treasury, said:
"Unlocking £3.5 billion of funding for the private rented sector will ensure that we continue to deliver the homes that people across the country need, as part of creating a stronger economy and fairer society. Housing starts are now at a 6 year high thanks to this government’s focus on building more homes.
"Investment in housing is essential for the future of an economy. That’s why for the first time in a generation, this government plans to directly commission homes, as well increasing investment in affordable housing to ensure the delivery of 275,000 affordable homes over the next 5 years. These guarantees will help to deliver more homes in communities across Britain."
Gary McKenzie-Smith, CEO and Managing Partner of Venn Partners, commented:
"We are delighted to have been appointed as the delivery partner for this important scheme. The mandate is underpinned by Venn’s presence and expertise in delivering term financing solutions and appropriate access points that allow a range of institutional investors to provide the much needed supply of credit into direct lending markets. We combine the real estate and credit underwriting expertise, capital markets track record and strength of investor relationships that is required to ensure the private rented sector housing guarantee scheme has a strong start and is a long-term success."
Paul House, Head of Real Estate and Managing Partner of Venn Partners, added:
"Attracting significant institutional investment to the private rented sector, which is now England’s second largest housing tenure, is critical to underpin its further expansion, improve standards and tenant choice and help increase the supply of new, purpose built homes to help address the UK’s overall housing needs."