Plymouth City Council were an early adopter of Rentplus, being the first local authority torecognise the value of including affordable rent to buy homes in new developments, offeringmore affordable housing choices for local people, and particularly those who are unable to afford to buy their own home.
Redwood Heights is a development of 190 new properties being built by national housebuilder,
Barratt Homes. A total of twenty-seven Rentplus homes are available, consisting of twenty-two
2 bedroom houses and five 3 bedroom houses, meaning twenty-seven families will be one step closer to owning their own homes, with the confidence to put down roots and invest in their new community. This is Rentplus’ second scheme in the Plymouth area, with more currently in construction.
Tamar Housing are managing these properties on behalf of Rentplus. The first phase of 9 Rentplus properties is complete and the first tenants moved into their new homes on the day of the opening! The remainder of the homes in the first phase of the development will be occupied by the beginning of March. The remaining 18 properties will be completed in stages throughout the year, with the final homes due to be finished and occupied by the end of 2018.
The event enabled the new residents of Redwood Heights to meet their neighbours and celebrate the completion of their new homes, and included speeches from Gary Streeter, MP, Julie Barnett, Tamar Housing CEO, and Steve Collins, Rentplus CEO.
Through Rentplus’ unique model, the new tenants will have the opportunity to rent their homes at a below market affordable rent and save to buy their new homes in 5, 10, 15 or 20 years. When it comes to buy their home, Rentplus will gift them a 10% deposit to assist them with their purchase.
Gary Streeter, MP, said: “It is five years ago that Richard Pillar first discussed this innovative housing idea with me and I am delighted to see the first Rentplus affordable rent to buy homes in Plympton for myself and be part of the formal opening ceremony. I have believed for a long time that to solve the housing crisis we need to offer a range of different types of housing – and particularly affordable housing – to meet the different needs and aspirations of local people. Rentplus is one such innovative option, providing a much-needed genuine alternative for local people who are struggling to find a secure home to raise their family and help build the communities of the future. I look forward to seeing many more such developments within the South West and beyond.”
Steve Collins, Rentplus CEO, said: “We are pleased to be able to help local families achieve their first step on the housing ladder and are pleased to be continuing our relationship with Plymouth City Council to bring more affordable housing to the local community. Rentplus has been set up to create opportunities for people and families with limitedprospects of accessing affordable homes, let alone buy a home they can call their own. We know that average house prices both here and across the country are otherwise often beyond the reach of many hard working people.
“Our innovative model gives people the opportunity to fulfil their dreams of homeownership while offering them the safety and security of long term tenure and an affordable rent.
“The success of schemes like this will allow us to expand our presence in Plymouth, delivering more affordable homes for local families and contributing to inward investment into the local economy, creating sustainable communities and place-making.”
Julie Barnett, Tamar Housing Chief Executive, said: “It is great to see the collaboration between Plymouth City Council, Tamar Housing and Rentplus come to fruition. These new affordable homes will support working families in Plympton who aspire to own their own home but cannot currently do so. It was great to take time to welcome the new tenants to their new homes and celebrate taking their first crucial steps onto the property ladder.”
Richard Pillar, the founding Director of Rentplus, said “It is particularly rewarding for me to see what was a concept for the delivery of a new model of affordable housing becoming widely recognised as a mainstream product across the country. Plymouth City Council officers and members across political parties should be congratulated for taking the time to understand the model and the hurdles we have had to overcome to satisfy the institutional capital markets. This project that has proven itself out in Plymouth is set to raise over a Billion pounds over the next five years to deliver housing across the country to support young aspirant families struggling to get on to the housing ladder.”
The South West, and specifically Plymouth, is where Rentplus started; and it continues to be a target area for growth. The opening of the Redwood Drive development further demonstrates how Rentplus’ affordable rent to buy homes complement Plymouth City Council’s strategic housing plans.
Their children, Lennon and Elsie now eleven and five, were fed up with having to share magnolia coloured rooms, and were desperate to have a space of their own that they could decorate to their own taste.
Damian Hornsey comments: “Despite saving for years we found that we just could not keep up with the house price growth in our area. It always felt like we were near the finish line, but every time we looked to buy we just didn’t have quite enough for a deposit.”
After googling options of affordable housing in their area, Damien and Kristy came across Rentplus’ affordable rent-to-buy model, applied to Cornerstone (the housing association partner managing the Rentplus homes in Cullompton) for one of the 10 available homes, and in June 2017 they moved into their new home in Saxon Fields, Cullompton. Through Rentplus they will have the opportunity to buy their new home in 5 years. In the meantime they will benefit from an affordable intermediate rent set at 80% of local private rented homes. The Hornsey Family will also have no maintenance costs or service charges to pay while they rent and will receive a 10% gifted deposit from Rentplus when they come to buy.
Damian Hornsey continues: “For us the Rentplus model is perfect, and it feels fantastic to be living somewhere which we will eventually own. Our new three bedroom house is a real upgrade from the two bedroom flat we were renting, yet we are saving an additional £30 a month, on top of what we are already setting aside, to put towards our deposit.
“The house itself is also great. We were previously living just off a very busy main road and I was always worried about letting the children play outside near so much traffic. However Saxon Heights feels like a really safe community, and the kids are able to go out and play with other kids on the street without us having to worry about them.”
Their new reduced rental and running costs means that Damian and his partner Kirsty are able to save more each month compared to the market rent they were paying before. These additional savings will be added towards the money they have already have set aside for their deposit and purchase costs, as well the 10% gifted deposit they will receive from Rentplus when they have the opportunity to buy their home.
Living in a Rentplus home also gives the Hornseys security of tenure – they won’t have to move again as they have a five year tenancy agreement with Cornerstone, who are also responsible for carrying out any repairs to the property until the Hornseys buy their home.
Dorset is currently experiencing some of the highest house price growth in England. The latest ONS House Price Index shows that prices in Dorset have risen 8% on the year, reaching £289,789. This is3% higher than the UK average, amounting to nearly £65,000 extra which buyers need to find if they are to purchase a home of their own. At the same time the amount of money spent by the Government on building affordable homes has dropped significantly from £11 billion to £5 billion over the last six years.
Rentplus is working to combat Dorset’s affordability crisis through its affordable rent to buy model, which offers tenants an innovative and alternative solution to home ownership. Rentplus provides tenants with five year renewable tenancies at an affordable intermediate market rent, set at the lower of either 80% of market rent or the Local Housing Allowance cap for the local area, inclusive of service charges. Tenants have the opportunity to purchase their home at either year 5, 10, 15 or 20 and are given a 10% gifted deposit from Rentplus to enable them to do so.
The new homes, which will comprise a mix of one and two bedroom flats, and two bedroom houses, marks Rentplus’ second scheme in Dorset, with 33 units already complete in Sherborne, West Dorset. Together the schemes signify a significant step toward reaching Rentplus’ target of delivering 5000affordable rent to buy homes across the country by 2020.
Steve Collins, Rentplus CEO, commented: “Our second scheme in Dorset shows Rentplus’ commitment to addressing the problem of affordability in the area and providing an alternative route to homeownership for those who have no other options. As levels of home ownership across the UK hit a 30 year low and the affordability problem reaches crisis point, it is essential that we offer more innovative and flexible housing tenure options, to help hard working people own a home of their own.
“We are very pleased to be continuing our partnership with both Tamar Housing and Persimmon Homes on the development; another excellent example of how through collaboration we can deliver more much needed affordable housing. These new rent to buy homes will offer the tenants a secure home at an affordable rent, the chance to save money and ultimately purchase their own home in the future. All whilst helping North Dorset District Council accelerate its affordable housing delivery.”
Julie Barnett, Chief Executive, Tamar Housing, said: “We are delighted that our partnership with Rentplus will enable us to offer more new affordable rent to buy homes in the South West. We know that there is a huge demand for these homes and that initiatives such as Rentplus, which offers an alternative pathway to homeownership and security are crucial, especially at a time when thousands are unable to save enough for a deposit.
“It is fantastic to be able to play a role in combatting the UK’s affordability crisis, and we look forward to continuing to work with Rentplus to deliver many more affordable rent to buy homes in the area.”
The first tenants are expected to move in within the next few months.
Read the full report here: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/662744/State_of_the_Nation_2017_-_Social_Mobility_in_Great_Britain.pdf
The challenge aspirant homeowners face in accessing the housing ladder is perhaps the most significant it has been in decades.
The latest official figures show that the average house price is 7.6 times the average annual salary, more than double the figure for 20 years ago.
This is compounded by the lowest levels of peacetime construction in the past 10 years since the early 1920s. Demand is far outstripping supply.
“The current range of low-cost homeownership tenures are only available to those who have a deposit.”
It’s no wonder, therefore, that more than half of 25 to 34-year-olds find themselves stuck in private rented accommodation, spending up to half their income on rent and struggling to save for a deposit to make the transition to homeownership.
The current range of low-cost homeownership tenures – such as shared ownership and Help to Buy – are only available to those who have a deposit.
The fact remains that there is a significant gap in the market for those without the ‘Bank of Mum and Dad’ or their own deposit.
Politicians from across the political spectrum acknowledge the need to address the housing crisis, with some, such as communities secretary Sajid Javid and Chris Chope MP, proposing solutions to help aspirant homeowners overcome the deposit trap by rolling out innovative tenures like affordable Rent to Buy at scale.
Rent to Buy has been trialled before, but previous models were typically developed in response to the financial crash in 2008 when shared ownership units were converted in order to address low sales. Current affordable Rent to Buy models are a mainstream tenure in their own right.
These new Rent to Buy models are specifically designed to allow people to securely rent the home they plan to purchase at an affordable rent with an assured shorthold tenancy – giving them time and an opportunity to put money aside for a deposit while establishing roots and investing in their local community.
“The fact that it is not readily being deployed shows that there must be a blockage in the system.”
Some models offer people a discount price on their home when they come to buy and others gift residents a portion of their deposit.
Both ultimately provide renters with a realistic and affordable route to homeownership.
Scaling up the delivery of affordable Rent to Buy doesn’t require public funds or subsidy.
One of the government’s Housing White Paper objectives is to encourage private investment into the delivery of affordable housing as a response to the housing crisis. Part of this investment should be destined for affordable Rent to Buy.
Conversations with institutional investors from across the city, including pension funds and banks, indicate that there is up to £40bn of private funding available for new tenure types, such as affordable Rent to Buy.
The fact that it is not readily being deployed shows that there must be a blockage in the system. The chancellor is looking for innovative cost-neutral ways to scale up the delivery of homes and removing this barrier could be one of them.
To unlock this funding the National Planning Policy Framework (NPPF) needs to be revised to broaden the definition of affordable housing as widely as possible and include affordable Rent to Buy. Mr Chope has championed this proposal and in October proposed a new definition of affordable Rent to Buy in the House of Commons as part of his Ten Minute Rule Affordable Homeownership Bill.
“The National Planning Policy Framework needs to be revised to broaden the definition of affordable housing.”
Official recognition in the NPPF would overcome local authorities’ reticence toward delivering innovative new tenures and provide the confidence needed for them to accept these schemes as part of Section 106 affordable housing planning requirements on new developments.
Delivery of privately funded affordable Rent to Buy is complementary to the government’s other affordable housing programmes and it can have a powerful impact in supporting local authorities to meet their housing obligations by reducing waiting lists and enabling people living in existing social housing to move into affordable Rent to Buy homes, thus freeing up homes for those most in need.
The evidence from one such model shows that up to 60% of tenants have been housed from housing waiting lists, and of these a third were previously living in social housing.
Turning on the tap of private investment and facilitating investment into accelerated delivery of affordable Rent to Buy would assist in fixing the broken housing market and see many more hard-working families fulfil their dreams of homeownership.
Steve Collins, chief executive, Rentplus
Sajid Javid’s proposal is an illustration of the more traditional methods of Government intervention that would see the public sector used to borrow, absorb risk and ultimately build more houses. The CEO of Rentplus, Steve Collins feels that the communities Secretary will be missing a great opportunity is they pass up on the opportunity to genuinely innovate while delivering affordable housing to the UK.
Rentplus has carried out conversations with the City, and as a result of these discussions feel that there is up to £40 billion of private funding available for a range of new tenure types. The investments that could be made without adding to the national and local government borrowing costs and without using public money would be beneficial in order to deliver more homes and help to ease the housing crisis. This funding could be unlocked with the amendment to the definition of affordable housing in the National Planning Policy Framework. The results of this would be wide reaching and will give councils the confidence to support these new types of tenure.
The Government’s Housing White Paper calls for more private investment into the UK housing sector, and Rentplus encourage taking these opportunities to deliver a radical fix to the housing market with the support of affordable rent-to-buy properties and giving working families the chance to own their own home.
Rentplus is the leading provider of affordable rent to buy homes across the nation and is funded by international investors. The model delivered by Rentplus offers those that aspire to be homeowners the security of a tenure and the opportunity to rent and then purchase their own home.
“That leave be given to bring in a Bill to make provision for affordable home ownership; to require the inclusion of rent to buy homes in the definition of affordable housing; to make provision for a minimum proportion of new affordable housing to be available on affordable rent to buy terms; to provide relief from stamp duty when an affordable rent to buy home is purchased; and for connected purposes.”
After highlighting the difficulty of saving for a deposit and the population’s continued desire for home ownership, Mr Chope outlined:
“The proposals in the Affordable Home Ownership Bill should therefore be particularly appealing to the Government—not least because they do not add to the nation’s debt, but rely instead on ensuring that some of the land set aside under section 106 planning agreements for affordable housing is earmarked for homes built for affordable rent to buy.”
Mr Chope went on to outline the affordable rent to buy model, quoting directly from the briefing, and highlighted the potential investment available. He then explained that this is subject to one caveat:
“Currently, affordable rent to buy does not come clearly within the definition of affordable housing, and the Bill requires that it should so do. There needs to be an explicit reference to affordable rent to buy in the national planning policy framework definition of affordable housing. Such clarity would enable many more local authorities to take forward these innovative schemes.”
Chris Chope read the full suggested definition by Rentplus and called on the Housing Minister to embrace it. He finished by arguing that the Bill “should enjoy the support of everybody in this House because it works with the grain of public opinion and would enable more people to reach their aspiration of becoming home owners in the United Kingdom.”
It was supported by a number of Conservative MPs:
The full transcript is available at: https://hansard.parliament.uk/commons/2017-10-24/debates/82B08866-A401-47A1-9C84-1CB538EC3A1C/AffordableHomeOwnership
Chris Chope’s supporting article for ConHome is available at: https://www.conservativehome.com/platform/2017/10/chris-chope-changing-the-rules-on-rent-to-buy-would-unlock-billions-in-private-investment.html
He brings extensive leadership experience to the business having held a number of senior positions within both the public and voluntary sectors. He is a housing specialist and most recently served as the Homes and Communities Agency’s Head of Area for the East of England.
John Gildersleeve, Chairman at Rentplus, comments: “We are delighted to have secured Steve’s appointment. He will add value driving the business forward and ensure continued growth and delivery of Rentplus’ affordable rent-to-buy homes. Steve has a demonstrable track record leading the successful delivery of a number of the Government’s key priority projects and affordable housing programmes including investment across five counties in England.”
Richard Connolly, the CEO for the past three years is retiring from Rentplus and will remain with the company until March 18. Richard will ensure a smooth transition to Steve and continue to work with the team on the delivery of affordable rent-to-buy housing across the country – primarily focusing on strategic engagement. Following his retirement from the role of CEO, Richard will continue to provide consultancy services to the business.
Steve Collins, Chief Executive at Rentplus, said: “I am delighted to have secured this very important role and look forward to working with the Rentplus Board and the team to deliver much needed affordable rent-to-buy homes across the country. I want to take this opportunity to thank Richard for all his hard work in building the business so far. Our ambition is to ensure that privately funded affordable rent-to-buy is included as a mainstream tenure on housing developments. This will ensure broader housing options are available for all and many more working people have a pathway to homeownership.”
It is only in recent times that the debate surrounding the delivery and quality of affordable housing in the UK has heightened sufficiently to put it at the top of the agenda, culminating in the housing white paper and the recently announced social housing green paper. Accelerating the delivery of affordable homes is at the heart of finding solutions to fixing our broken housing market. To do so, there is an urgent need to work collaboratively to ensure that the solutions include the injection of additional money into the housing market, as well as providing choice and opportunities for all sections of society to have security and a place to call home.
Rentplus was borne out of a recognition that the housing market does not provide sufficient housing options to meet the needs and aspirations of all sectors of society, particularly those individuals and families who are not considered a high priority for social housing, who cannot immediately afford a deposit, are at risk of no-fault s21 notices and don’t have access to the bank of mum and dad. We also identified this as an opportunity to work in partnership with local authorities to accelerate the delivery of affordable housing, provide them with a financial return and achieve affordable housing policy levels in their areas whilst offering a new housing tenure for local people.
We welcomed Alok Sharma’s recent confirmation that it is the government’s intention for privately funded affordable rent-to-buy models to be specifically considered as affordable housing within the new NPPF definition. This will ensure that affordable rent-to-buy becomes a mainstream affordable housing tenure. Rentplus is entirely funded by institutional investment, meaning our model delivers additional affordable homes at no public cost and both complements and augments what local authorities and housing associations are able to build.
Facilitating the injection of private institutional investment into the affordable housing market could be one of the keys to unlocking the crisis. From our own discussions with investors, we know there is potentially £40 billion of institutional investment available. The advantage of the Rentplus model is that it provides a win-win for local authorities. Where Rentplus has already developed schemes, up to 60% of tenants came from either the Choice Based Lettings scheme or the waiting list; of these, over 30% moved from existing social housing, freeing these up to house people in need and supporting local authorities to meet their wider housing responsibilities.
The National Housing Federation recently highlighted that £9.1 billion of public money is being spent on housing benefit, a substantial increase since public investment in affordable housing reduced, with much of this ending up in the pockets of private landlords. Rentplus delivers homes without any grant or public subsidy, ensuring central and local government funding can be fully invested in providing other types of affordable housing.
We wholeheartedly agree with the Chartered Institute of Housing report published last month that emphasised the need for local authorities and housing associations to develop close working relationships in order to meet housing need. Working collaboratively with both local authorities and housing associations is central to the way Rentplus works, delivering more affordable homes through partnership.
The Rentplus model helps ordinary hard working people and benefits local authorities, housing associations and developers. In the housing white paper the government stated that at least 250,000 new homes are needed each year and with the continuing issue of affordability, new solutions and options are required. Delivering sufficient homes of a variety of tenures to meet the needs and aspirations of everybody is crucial. Affordable rent-to-buy has a key role to play in creating choice and in tackling the housing crisis.
The government plans to boost funding for affordable homes by providing £9.1 billion – up by £2 billion – of public funding as part of its Affordable Homes Programme, which housing associations and councils can bid for.
It envisages that the extra £2 billion investment would supply around 25,000 more homes at rents affordable for local people.
However, while Steve Collins, chief executive of affordable rent-to-buy homes provider Rentplus, welcomes the new plans, he says they don’t go far enough.
“We must be realistic about the scale of the challenge. Figures from [analyst] TwentyCi show that the number of 18- to 35-year-olds buying a home has fallen by a staggering 21.6% in the last quarter,” he says.
The government reports that since April 2010, around 333,000 affordable homes have been delivered, including 240,000 for rent, but Mr Collins points out that in the past year, the number of affordable homes built has been only slightly over 1,000.
He explains: “The additional £2 billion will only lead to a further 5,000 affordable homes a year being delivered out of a target of 200,000 new homes every year for five years – or 2.5% of the total needed. Given the number of homes we built for social rent fell from 40,000 in 2011-12 to 1,102 in 2016-17, the funding boost is welcome, but ultimately it is a mere drop in the ocean.”
Social Rent Deal
Ministers also confirmed plans to set a long-term rent deal for councils and housing associations in England from 2020, with the focus on areas where working families are struggling with the costs of rent and some are at risk of homelessness.
To give social tenants more security, increases to social housing rents will be limited to the Consumer Price Index (CPI) measure of inflation plus 1% for five years from 2020.