A £200m ‘build to rent’ fund has been launched by housing minister Mark Prisk – meaning that the concept of developments where a specific proportion of homes is built for private rental purposes has taken a step closer.
The fund aims to encourage pension funds and other institutional investors to back ‘build to rent’ schemes.
The fund will provide equity or loan finance for larger projects with 100 or more privately rented units on new home schemes in England. The new rental properties would be publicly financed until built, let out and managed, at which point the developer would repay the money.
Management companies would also have the chance to invest in the new rental homes, while it is envisaged that managing the rental properties will provide new business opportunities for high street agents.
Prisk said that demonstration projects would be created through the fund.
He said: “A healthy rental housing market must have a broad range of choice across the board. But for it to grow and develop, we must first attract new investors. The build-to-rent fund will support this.”
The launch of the fund marks a step in the implementation of the Montague Review of Housing Investment, conducted by Sir Adrian Montague last summer.
Liz Peace, chief executive of the British Property Federation, said: “Part of the challenge of attracting institutional investment into market renting is finding suitable stock to invest in.
“The existence of this fund, and the speed at which it has been put in place, is important and very welcome in illustrating Government support for build-to-rent.
“The choice of specific projects, however, will determine its success, and the aim should be to find projects that exemplify build-to-rent and that will act as an excellent catalyst to the wider market.”
She called on the Government to clarify how the planning system will treat build-to-rent schemes which the Montague Report said could replace developers having to provide affordable homes.
The fund is now open for bids, and the prospectus has been published on the Homes and Communities Agency website.
The deadline for expressions of interest is February 4, and shortlisted schemes are expected to be announced in March.