Cambridgeshire and Oxfordshire are listed in the top five of Lloyds Bank research which sets out the UK’s least affordable cities in which to live. Key workers who keep the cities of Oxford and Cambridge ticking are being steadily priced out of owning their own homes. The need for greater provision of truly affordable housing is starkly evident.
Local authorities recognise the scale of the challenge and with the recent devolution deal between Cambridgeshire and Peterborough the devolved authority will have new powers to deliver different types of housing that will provide local people with more affordable homes and, for some, help them fulfil their dream of homeownership.
Richard Connolly CEO of Rentplus believes that rent-to-buy tenures are part of this solution, offering more people the chance of affordable homes and the option of homeownership in Oxfordshire and Cambridgeshire. This is why Rentplus have recently announced two new partnerships to start delivering them in both counties. In Oxfordshire they are currently building 10 rent-to-buy homes with Harrow Churches Housing Association and Mulberry Developments in the growing town of Bicester. These homes are the first phase of a major programme of investment and delivery across Oxfordshire for Rentplus.
In Cambridgeshire Rentplus will be working with King Street Housing Society to build rent-to-buy homes and have identified four potential sites that would be suitable for development across South Cambridgeshire and the Fenland region. Their ambition for the county is to deliver 1,000 rent-to-buy homes by 2020.
Cambridgeshire and Oxfordshire aside, people in every part of the country would benefit from the security of tenure the Rentplus model offers, the affordable rental rate which encourages tenants to save for their deposit and the knowledge that eventually they will own their own home.
2016 was a landmark year for all of us at Rentplus. We started working with more developers and housing associations to build and manage our homes, we secured significant financial backing from major institutional investors, our pipeline has grown and our work is helping rent-to-buy become recognised as a mainstream solution to delivering a greater volume of affordable housing by all levels of government. All of 2016’s achievements wouldn’t have been possible without the strategic direction of the board and the hard work and dedication of all of our colleagues.
In 2016 we saw that our model is beginning to make a real difference on the ground. At Palmerston Heights, Plymouth, our first group of rent-to-buy tenants moved in. Many of our new residents had given up the dream of homeownership until they heard about our innovative model. One family that moved into the scheme were the Rafiqs. Like many of our other tenants they were stuck in private rented accommodation and couldn’t afford to save for a deposit. Now in their new home they are paying an affordable rent, benefitting from security of tenure, saving money every month toward buying their home and will enjoy a 10% gifted deposit from us when they go on to purchase it in five years’ time.
Former private renters are just one side of the story, however. Analysis of the other tenants at Palmerston Heights reveals that more than 30% were in socially rented accommodation before moving in. For councils and local authorities with long housing waiting lists this shows that rent-to-buy is a win-win. Not only does it free up social housing for those in need, it also enables tenants to fulfil their homeownership aspirations.
One of the ways Rentplus can help more people reach their housing goals is by continuing to attract outside investment in 2017. In 2016 we secured significant institutional funding from BAE systems’ pension fund, as well as from American investment firm Crestline. We are always on the lookout for more funders and hope to announce further deals soon. The money we have raised so far has been put to good use to expand our pipeline to new sites in places like Gloucestershire, Cambridgeshire, Oxfordshire and Devon.
Now we’re in 2017, I can say with certainty it will be a huge year yet for rent-to-buy. The springboard for this will be the detail of the Government’s Housing White Paper, expected to land in the middle of this month. It is rumoured that it will include an expansion of the definition of Starter Homes to include other affordable tenures like rent-to-buy. These changes will make it easier for rent-to-buy models like ours to be included as part of affordable housing on new developments, assisting local authorities to achieve their affordable housing targets and creating more balanced communities.
The expansion of rent-to-buy will be crucial to ensuring that we have a housing market that works for the many not the few. It will also enable us to work with even more partners to deliver more homes. 2017 is going to be an even bigger year for the business!
Richard Connolly, Rentplus CEO, said: “Hot on the heels of the Government’s announcement that they are keen to bring more rent-to-buy homes to local communities, we are pleased to be delivering exactly that.
Rentplus and Harrow Churches Housing Association (HCHA) announce a new partnership to deliver new rent-to-buy homes at Mulberry Developments Stratton Park scheme in Bicester. Located in Cherwell District Council, the local authority is leading the way on delivering affordable housing in Oxfordshire and the Rentplus homes are the first rent-to-buy properties to be built in the county.
The 10 two bedroom homes will be constructed by premier regional developer, Mulberry Developments, and will form part of their Stratton Park development on London Road in Bicester. In total, the development will comprise 125 units. HCHA will manage the 10 Rentplus homes once they are built and will support the new occupants seeking to buy them in the future.
Chris Holley, HCHA Chief Executive, said: “This scheme at Stratton Park is a great example of how collaboration and partnership is key to bringing more affordable homes onto the market, and Harrow Churches Housing Association is very pleased to be partnering with Rentplus. These affordable properties will support working families in the county, who aspire to own their own home but cannot currently do so, take their first step onto the property ladder.”
Steve Mitchell, Residential Director for Mulberry Developments said: “Mulberry Developments already has an excellent reputation for building high quality houses across the region. We are differentiating ourselves in terms of the level of design and specification and by raising the bar in terms of what potential buyers should come to expect from a new home and these rent-to-buy apartments at Stratton Park are no exception.”
Stratton Park is located within walking distance of Bicester town centre, Bicester’s designer shopping village and railway station – which takes commuters to both London and Birmingham in just under an hour.
Rentplus has already identified four potential sites in the Fenland and South Cambridgeshire districts to build a proportion of this target. When constructed, KSHS will be responsible for managing the homes, with Rentplus actively seeking out more sites in the region too.
Research by Lloyds Bank reveals that Cambridge is currently one of the top five least affordable cities in the UK in which to buy a home, with average prices 9.9 times average salaries – underscoring the urgent need for more affordable housing in the area. The recent devolution deal between Cambridgeshire and Peterborough has been pivotal for the deal as it contained new funding and powers for the region, allowing the council to shape the type of housing it needs.
Richard Connolly, Rentplus CEO, said: “Our new partnership with King Street Housing Society will form the foundation of our ambitious plans for Cambridgeshire. “The recent devolution deal means that local officials have more power than ever before to get their housing mix right which means using new types of tenures to meet local housing need. Rent-to-buy is an innovative model that gives families who are just about managing the opportunity to fulfil their dreams of homeownership while offering them the safety and security of a long-term tenure. We look forward to working with King Street to make more of these dreams a reality in Cambridge.”
Craig Glasper, KSHS Chief Executive, said: “We are delighted to be working with Rentplus to deliver Cambridgeshire’s first rent-to-buy homes. At King Street we are always on the lookout for innovative new tenure models that can best meet local housing needs. The Rentplus rent-to-buy homes are exactly this. They will enable our city to meet the homeownership aspirations of families and key workers at an unprecedented scale.”
Cllr Lynda Harford, South Cambridgeshire District Council’s Cabinet Member for Housing, said: “We know that people in the district have a very wide range of housing needs. Clearly, we have people in need of social rented homes as they are not able to, or may not want to, get on the housing ladder. However, we also have a huge number of people who are the squeezed middle. These families often have a good household income but are struggling to afford to buy their first home often because saving a deposit is difficult. We are working really hard to find innovative ways to address the problem and warmly welcome Rentplus’ plans that will help local people in the area.”
Savills Cambridge offices were therefore the perfect location for our inaugural breakfast seminar. The event bought together a range of excellent speakers to discuss the barriers to and opportunities for accelerating the delivery of housing, not just in Cambridge, but across the UK. The speakers were drawn from across local government and the housing industry, including Cecilia Tredget, Managing Director, East of England Local Government Association (LGA); Stephen Hills, Director of Housing, South Cambridgeshire District Council; Suzanne McBride, Strategic Director, Cambridge City Council; and Bryn Maidman, Divisional Managing Director, Eastern and Central Regions, Taylor Wimpey.
Each of the speakers offered insight into their specific local issues and the broader priorities of their sector. For the LGA the most pressing concerns of their members included the uncertainty created by Brexit, ensuring they are able to deliver affordable housing, and the skills gap and lack of construction materials to actually build homes. As a result, there is a greater focus on collaboration between LAs to address these issues, using their powers to bring sites forward and promote new methods of construction to speed up the delivery of housing.
The speakers from Cambridgeshire’s local authorities said they were doing exactly this. They observed that the economic impact of getting the right house types and price points are critical to the future success of Cambridge and the UK. They are working together and actively considering local changes to the National Planning Policy Framework to introduce more flexibility into the housing market to build more homes and improve the transactions within it. Now the Government have agreed a devolution deal it is likely there will be more of this to come from them; exciting times!
From the developers’ perspective the biggest issue which gets in the way of building homes for big and small developers is the complexity of the planning system. It simply takes too long to get schemes through. This ties up cash, creates uncertainty, impacts the supply chain and takes too long to get a return on their investment. The unintended consequence of this is that it prohibits small and medium builders (SMEs) delivering as they don’t have the same financial strength of a larger developer. The main “ask” is that it needs to be easier to get planning approvals for which changes in policy are required, and to provide more continuity and certainty for SME builders.
I was also speaking on the day and explained that delivering more affordable housing through s106 agreements will only be achieved at the scale and pace of the open market, and that we need to break down the constructs of housing “labels”.
For me the biggest takeaway was the consensus on the obstacles and solutions to delivering more housing between the local authority and industry speakers. We all agreed that our respective sectors needed to dispense with any mutual mistrust and to work in partnership with one another, rather than in competition, if we’re going to build homes at the rate we need to. Encouragingly, the Autumn Statement seems to indicate that Government thinking is similar. There is clear agreement that we need a strategic plan for housing, we need more flexibility around tenure types, we need better infrastructure to support developments and we need to ensure we have sufficient numbers of people with the right types of skills to deliver it all.
At Rentplus we are hoping that January’s Housing White Paper will translate this consensus into action and break down the barriers which are frustrating the building of new homes on the ground, underpinned by the new funding initiatives announced in the Autumn Statement to support housing growth over the next five years. The event taught us that there is a consensus on the range of options to solve the housing crisis, but we will not reach this goal unless we come together and get Britain building again as we did successfully in the two post-war eras.
Richard Connolly, CEO of Rentplus
The Government has indicated that there is no definitive timetable for Starter Homes. Our first ‘wish’ is to get more clarity on this and we would really like to see a broadening of the definition of Starter Homes within the Act, which may be included within the White Paper. The current proposed definition of Starter Homes is too narrow, restricting the ability of local authorities to deliver affordable home ownership in a way best suited to the needs of their local area. As we’ve said before, affordable rent-to-buy models should be included in a wider definition of Starter Homes. Rent-to-buy models like ours can make home ownership a reality for those who are unable to save for a deposit to buy a typical Starter Home.
Next, we believe more affordable housing could be provided if the Government were to introduce a cascade system for Starter Homes, so if there isn’t enough demand for these properties or the prices are too high, the homes are changed to rent-to-buy or shared ownership instead. This would be a really positive improvement on the current proposal, retaining affordable housing for people who need it instead of developers selling the homes at full price on the open market and paying a commuted sum to the local authority in compensation. We would also like the blanket requirement of 20% Starter Homes on each new development to be revised to give local authorities flexibility to determine the number of Starter Homes that should be included on each developments to reflect local housing needs and demand.
We also hope the Housing White Paper includes a broadening of the National Planning Policy Framework definition of affordable housing, specifically to include rent-to-buy so that it becomes a mainstream affordable housing tenure. This will make it even easier for rent-to-buy models like Rentplus to be included as part of the affordable housing on new developments as part of s106 agreements assisting local authorities to achieve their affordable housing targets and create balanced communities.
As a final flourish, we would like more clarity on some of the policies announced in the Autumn Statement. What tenure are the 40,000 affordable homes announced by Philip Hammond intended to be and who will build them? How will the National Productivity Investment Fund be used to speed up housing delivery and can rent-to-buy be part of that provision? When it comes to the new Housing Infrastructure Fund, how can affordable rent-to-buy products be included in the high demand areas to address the unaffordability of homes that Philip Hammond referred to?
As the haze of Christmas clears, and we head into the New Year, we are hopeful that there will be clarity on some of the above points and also change. Ultimately, we believe that flexibility is key to establishing a housing policy fit for the future which will create strong, vibrant communities and unlock delivery so that we can start to fix the issues underlying the housing crisis facing us.
Richard Connolly, CEO of Rentplus
Come along to meet Tamar Housing and Rentplus at to talk about your pathway to home ownership, via a new affordable housing scheme coming soon to West Devon.
Okehampton Town Council Chambers
Fore Street
Okehampeton
EX20 1AA
Tuesday 13th December: 2pm – 7pm
Rentplus is an innovative affordable housing product for those who aspire to ownership. Rent a brand new home for an affordable rent, then receive a 10% gifted deposit towards buying that home at between 5 and 20 years.*
Come along to talk to us to find out more.
*Subject to qualifying criteria
Home ownership remains an important aspiration among the general public in the UK but is it a realistic one? Anecdotally, the answer to this probably varies depending on who you ask and their own personal experience. However, studies still show that the vast majority of people want to own their home and a major focus of the current housing crisis should not just be about total supply to meet demand but how the policy environment needs to change to support the aspiration of ownership.
The latest research from the Council of Mortgages Lenders’ long-running series on attitudes to housing tenure supports this as it confirms that home-ownership remains important to people and 72% of adults want to be home-owners in two years’ time with this rising to 80% within a decade.
The research also found that the majority of people – regardless of their own circumstances – feel it is harder than ever for young people to buy their own home. So while clearly the desire is there to buy a property, it is apparent there is still not enough being done in terms of creating achievable options.
Rentplus recently held a breakfast briefing with MPs and policy researchers to discuss our rent-to-buy model and how more options are required which allow people to more easily to bridge the gap between home-ownership aspiration and reality. It was fascinating to hear from the attendees how the different drivers of the housing supply chain – be it local authorities, developers or housing associations – had varying challenges in their regions in terms of delivering affordable homes.
While we don’t consider Rentplus to be a panacea to the housing crisis, we can make a positive and constructive contribution to the housing delivery supply chain as well as providing opportunities for people trapped in unsuitable housing to access secure affordable housing with the opportunity to buy their home in the future with a 10% gifted deposit from Rentplus.
We are a complementary housing tenure which provides an alternative route to home ownership for people who are otherwise unable to get onto the housing ladder. However, we know that there is no “one size fits all” solution, and instead we need a range of options and tenures to suit the needs and circumstances of the UK population at large. New thinking, new policy not just new homes are needed if we are to address the housing crisis once and for all, and enable people to achieve their dream of owning bricks and mortar. We were delighted with the engagement during and after the meeting with the MPs and hope to continue to demonstrate how our model will bring home ownership that bit closer to reality for many more people.
Richard Connolly
CEO Rentplus
We agree with the Chancellor’s comments about the effect of unaffordable housing on productivity and delivery of much needed housing and his acknowledgement that “for too many, the goal of home ownership remains out of reach.” His announcement of a range of new measures to address these issues is most welcome and marks a step-change in housing policy. The introduction of the new Housing Infrastructure Fund and the NPIF will undoubtedly be a significant and spur to accelerate the delivery of new affordable homes, unlocking innovation in the housing sector and delivering new affordable housing in high demand areas. In London, the increase in funding for the GLA to deliver 90,000 new affordable home starts by 2020 will be essential in ensuring it’s still possible for those on lower incomes to continue to live in the Capital. We hope that rent to buy homes will be included in this pipeline.
“We are delighted that the Government recognises the importance of creating mixed tenure developments providing more homes of every type and addressing the affordability gap. Rent to buy models, like Rentplus, are designed for working families who are just about managing, making a real difference to the quality of their lives now as well as their future aspirations. It’s good to see that the government has taken a wider view of affordability – the support the Chancellor has provided through the changes to Universal Credit should make it easier for families to stay in work and progress up the career ladder, afford child care costs and save for a deposit to buy their own home. The extension of the Help to Buy ISA is good to see as this will encourage the nation to get in the saving habit and enable Rentplus tenants to save to top up the deposit we give them when they buy their home.
“With average house prices more than 9 times median incomes in 39 per cent of local authorities, we need to do something different to enable those who can reach their goal of home ownership. While the additional 40,000 new affordable homes announced will help, they won’t be enough to counter this trend. We are looking forward to the government’s Housing White Paper and the details of how these new initiatives will be delivered; we also hope that Rent to Buy models will be recognised as a mainstream housing product both as a Starter Home and truly affordable housing alongside traditional options. This would enable local authorities to boost their supply of affordable homes to rent whilst providing a complementary housing solution for those who aspire to own their own home without an increase in Government spending.”
After 7 years stuck in the private rental sector in Stoke in Plymouth, the Rafiq family finally have a home to call their own. Muhammad Rafiq, a 46 year old engineer at an aerospace firm, together with his wife Maria, a 36 year old stay at home mother, have recently moved into their Rentplus home – a two bedroom house located at Persimmon’s Palmerston Heights part of the new Seaton Neighbourhood development in Plymouth. Before moving into their new home, the Rafiq’s found it impossible to save for a deposit as more than 25% of their monthly income was eaten up by rent each month. The Rafiq’s are not alone – saving for a deposit continues to be one of the biggest obstacles to home ownership. Recent figures from Shelter reveal that 86% of people say they would like to own their home, but 75% of renters are unable to save more than £100 a month towards a deposit.
Through Rentplus’ unique model, the Rafiq’s will have the opportunity to buy their home in just five years, in the meantime benefiting from an affordable intermediate rent set at the Local Housing Allowance (LHA) level plus no maintenance costs or service charges to pay while they rent; and when it comes time to buy their home, Rentplus will gift them a 10% deposit towards their purchase! When Mr Rafiq found out about Rentplus’ innovative rent-to-buy model he couldn’t believe his luck. He comments: “Our dream has long been to own our own home but with the high costs of renting combined with the need to save thousands of pounds for a deposit it’s never been in reach for us. This model is ideal for our needs as we have the certainty of living in the home which we will one day own and the reduction in rent is making a huge difference to our lives. Owning your own home is one of the greatest things in life – knowing that we won’t have to move again because of rising rents or at a landlord’s discretion ensures that we can plan ahead and establish real roots in the local community. We love living in Plymouth – our daughter attends a local nursery and both the sea and local countryside are on our doorstep. Our quality of life has vastly improved.”
The Rafiq family have set a goal of purchasing their two bedroom home in 5 years. Their new rental costs mean that they have the potential to save up to £200 a month versus market rent for a similar property in the area and they plan to make additional savings too. These savings can be put towards their deposit and other purchase costs in addition to the 10% gifted deposit from Rentplus.
The Rentplus rent-to-buy model offers five year renewable tenancies at an affordable intermediate rent, set at 80% of market rent, or at LHA level depending which is lower. Tenants are given the opportunity to purchase their property at year 5, 10, 15 or 20 and are eligible for a 10% gifted deposit from Rentplus to aid their mortgage application. The tenants’ monthly rent includes service charges, and with no maintenance responsibilities, occupants have time to save for a deposit and build a credit history that will support their mortgage applications.
Richard Connolly, CEO at Rentplus, comments: “Rentplus was set up to help hardworking people, who couldn’t otherwise get on to the property ladder, own their own home. Our model also increases the number of affordable homes in an area, freeing up local authority waiting lists and housing budgets. With such a severe shortage of homes, it is vital that we look at new housing solutions to help hard working families like the Rafiq’s. Our model shows that through greater collaboration, we can bring more homes to the market and extend the opportunity of homeownership to more people than ever before. ”
Palmerston Heights is home to 19 brand new two, three and four bedroom Rentplus homes built by Persimmon in partnership with local housing association Tamar Housing and Plymouth City Council. All properties are specified to the highest standards and include stylish kitchens, bathrooms and private gardens. Around 30% of the Palmerston Heights homes were allocated to households currently living in social housing which freed up much needed homes for families in priority housing need.
Rentplus have a pipeline of over 8,500 homes across the country, we currently have two active sites in Plymouth and have completed homes at Lechlade, Gloucester, Sherbourne and Palmerston Heights Plymouth.