The purpose was to explain our innovative rent-to-buy model to other Members of Parliament, encourage them to promote Rentplus to their local authorities and in their constituencies. We also discussed how they can support Rentplus by seeking formal recognition of rent-to-buy as an affordable housing tenure in the revised National Planning Policy Framework and its inclusion in the Starter Home definition in the new Housing and Planning Act.
During the briefing, MPs heard how £70 million of private investment has been raised to-date to deliver Rentplus’ business plan target of 5,000 homes by 2020, how Rentplus is engaging with 50+ local authorities to deliver much-needed affordable homes in their areas, and how Rentplus welcomes the backing of government to deliver 10,000 rent-to-buy homes in their affordable housing programme. We were able to demonstrate how Rentplus could be part of the solution to the housing crisis, bridging the gap between demand, supply and affordability of housing in communities and explain that the scheme is really taking off. The MPs that joined us engaged in lively debate, identifying the problems preventing their constituents from achieving their first step on the housing ladder – so our innovative model really appealed to them. We hope the MPs will also keep Rentplus in mind when discussing issues facing the delivery of the government’s ambitious housing targets, the potential impact of Brexit on the construction industry and future housing legislation.
We were delighted with the level of engagement of the MPs who attended, and that several MPs have already scheduled further follow up meetings in their constituencies to discuss practical housing matters in their areas and how Rentplus can assist in supporting delivery.
The breakfast briefing was a huge success and we plan to run similar events in the autumn to engage more MPs in this important debate.
Richard Connolly, CEO of Rentplus
Richard Connolly, Chief Executive Officer at Rentplus, comments on the Local Government Association’s housing commission’s preliminary findings paper which was published today: “These recommendations from the LGA are a breath of fresh air. The housing affordability crisis is endemic across the UK which means councils now need to look to new ways to satisfy growing demand for affordable homes. We are delighted the LGA has recommended that councils should focus on stimulating new building and consider innovative affordable housing products such as rent-to-buy to do so. It is time to think outside the box but councils need help from multiple sources. New delivery structures, such as those fully funded by institutional investors, can help councils deliver more housing in their area and provide certainty to underpin housebuilders’ developments. In the post-Brexit aftermath, which has catapulted the UK into a period of uncertainty, this is crucial for boosting confidence in the sector.
“Our belief is that mixed tenure communities, offering a range of housing options to suit different needs, including rent-to-buy, are crucial to building a strong and sustainable UK property market. Affordable rent-to-buy homes provide a viable and complementary alternative to traditional rented homes, helping the many people struggling to save for a deposit to buy.”
“It is of course encouraging to see that the government’s Help to Buy equity loan scheme has helped tens of thousands of first-time buyers onto the property ladder over the last three years. However, with the average purchase price of these homes over £220,000, this scheme will still only help a section of people who aspire to home ownership in the UK. A minimum cash deposit of around £11,000, which must be put up by prospective buyers purchasing an average home under this scheme, is not always within immediate reach – especially in light of soaring rental prices which are taking up more than half of young people’s salaries.
“As a country, we need to recognise that there is more than one path to home ownership and creative solutions are required to solve the housing crisis. Flexible routes such as affordable rent-to-buy models cater to a further section of aspiring home owners, who might not be in a position to buy immediately, and would benefit from the opportunity to save. In order to ensure crucial tenure options like rent-to-buy are available in future, we call on the government to include these tenures within its definition of Starter Homes as part of the new Housing and Planning Act.”
The development which includes 6 new energy efficient Rentplus homes – each finished to an incredibly high specification – will provide much sought after new housing within this popular village.
The mix of (2x) two bedroom, (3x) three bedroom, and (1x) four bedroom semi-detached properties will be managed by GreenSquare who will be responsible for the allocation/selection of tenants and management of the new Rentplus homes.
All applicants will be assessed via the Gloucestershire Homeseeker application process to ensure they are suitable for the Rentplus product. For details of how to apply or to make an application, please visit Gloucester Homeseeker.
The properties will be managed by GreenSquare – please click here to view their website.
When the Housing and Planning Bill emerged from parliamentary ping-pong and passed into law in May it was not the end of the story. The Department for Communities and Local Government had issued a technical consultation seeking views on details for the regulations to support the Starter Homes clauses in the Bill.
This provided an important opportunity to shape the definition of ‘Starter Homes’ and influence the thinking behind the future of the affordable housing landscape.
At its heart, our response to the government identifies that, through sharing the same objective in providing aspiring households in need the opportunity to buy their own home, affordable rent-to-buy is a Starter Home. Our belief is that mixed tenure communities, offering a range of housing options to suit different needs, including rent-to-buy, are crucial to building a strong and sustainable UK property market.
Affordable rent-to-buy aims to move a household into full ownership and is complementary to the Low Cost Starter Home concept. The latter is ideal for households at an advanced stage who have a deposit available and are therefore able to take advantage of this opportunity.
However, many people are locked out of home ownership by the prohibitive nature of saving for a deposit. The average prospective first-time buyer will currently spend around £50,000 on rent before buying and the average first-time buyer deposit now exceeds £28,000. The rented period of the affordable rent-to-buy tenure, crucially, allows first-time buyers to save and, under the Rentplus model, the 10% gifted deposit aids their mortgage application. By including affordable rent-to-buy within the suite of Starter Home products, home ownership will be accessed by a far wider range of people, helping the Government deliver on its policy aims.
Another crucial point is that relying heavily on a single Low Cost Home Ownership product within a scheme has a number of drawbacks including availability of mortgages, restricting cash flow within schemes and developers not wanting to take market risks in delivery. The delivery of affordable housing within development schemes nationally averages 25% – if there is a requirement to deliver 20% Low Cost Starter Homes this will leave very little room for other tenures and, in our view, creates a risk to the Government’s aim to increase the supply of new housing across the country. Affordable rent-to-buy gives developers comfort because the guaranteed sale of a proportion of affordable housing at the commencement of development de-risks the scheme; it provides cash flow through the construction period to further assist the delivery of the scheme and provides an option to underpin Low Cost Starter Homes in the event of slow sales.
The need to deliver affordable housing in the UK has led to significant innovation in the sector, with private affordable home ownership models created to increase the number of products available. The delivery of Starter Homes, as currently proposed, risks the delivery of affordable tenures such as affordable rent-to-buy – they are in fact a crucial part of the UK housing landscape.
Rich Pillar, Director of Development
We’re looking for proactive and professional individuals to join our small and friendly team in Plymouth. We’re an ambitious company with a development programme to deliver 5,000 rent to buy homes by March 2020 and we’re seeking the following key staff members to enable delivery.
Head of Programme Delivery
Finance Manager
New Business/Project Manager
If you’ve got the skills and experience we’d love to hear from you.
Please contact Lucinda Yates at lyates@rentplus-uk.com for more information.
Last week the Royal Assent was given to the Housing and Planning Bill, passing what has been one of the most highly contested pieces of legislation ever into law. The Queen’s Speech this week reiterated the government’s commitment to housing in the UK – particularly home ownership.
The Housing and Planning Act reflects the extremely high level of demand for home ownership – 86% of people in the UK would rather own their own home than rent.
However, we are concerned that if the threshold for starter homes is set at 20% of a development, as proposed by the Government, this will be detrimental to the availability of other forms of affordable housing.
Delivery of affordable housing within development schemes nationally averages 25%. Inclusion of starter homes on every scheme at 20% would therefore mean that in many areas their affordable housing provision is almost entirely consumed by starter homes.
Some first-time buyers will be assisted by the starter homes proposals, which will enable them to receive a 20% discounted purchase. However, there will remain a large proportion of aspiring homeowners that will continue to be locked out of the market due to income and deposit requirements. Research from the Home Builders Federation report states that 73% of first-time buyers cite saving for a deposit as a main obstacle to home ownership.
Innovative low-cost home ownership products, such as our rent to buy model, uniquely overcome this barrier by enabling aspiring first-time buyers to save for a deposit through paying an affordable intermediate rent and receiving a gifted deposit of 10%.
If products like this were included within the starter homes requirement it would make a real difference to those aspiring home owners that cannot afford even a discounted purchase.
Complementary to the Government’s ambitions, this would ensure that the opportunity for home ownership is extended far more widely and local authorities are able to plan more inclusive mixed tenure communities.
With the Government turning its attention to the Neighbourhood Planning and Infrastructure Bill announced in the Queen’s Speech this week, it’s clear that increasing the supply of homes remains a top priority.
This new Bill will streamline the planning process and give local communities more control in the process of constructing new homes. This is something we support, as it should spur future development across the country. However, if the government doesn’t focus on affordability in this new bill or include affordable tenures within the definition of ‘starter homes’, we may still face a shortage of genuinely affordable homes.
Richard Connolly, CEO of Rentplus
Watch the Housing Plymouth 2016 promotional video by clicking here
We have secured a significant investment of up to £70 million from BAE Pension Fund, enabling us to deliver 580 new homes which will allow tenants to rent on an affordable basis with an option to buy. This funding enables us to put a significant dent in our goal of building 5,000 new affordable homes by 2020 in order to help solve Britain’s housing crisis.
BAE Pension Fund has committed an initial £35 million to us via an inflation linked bond, with the possibility of an additional £35 million in the future. It has been a pleasure to work with BAE Pension Fund who used their intimate knowledge of the affordable housing sector to understand our unique offering. The team has worked with us over the past 18 months, during a period of significant market changes in the Registered Provider market, to successfully create an innovative funding structure for us.
We’re talking to a number of other potential funding partners to boost our investment even further. In order to deliver our ambitious pipeline of 8,500 homes we need £1 billion of funding in total.
One of the biggest benefits of our model is that it provides a continuous stream of affordable housing, because we endeavour to replace every home that is sold. Combined with the mixture of capital appreciation and rental income we can offer investors a stable, long-term, ethical, investment-grade opportunity. Keep watching this space for further developments.
Richard Connolly, CEO of Rentplus
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