The properties will be bought to the area by Rentplus, an innovative provider of rent-to-buy homes, and Tamar Housing, a leading housing association in the South West. The six new properties comprise of four two bedroom homes and two one bedroom flats and are part of Tamar & Provincial Properties’ Langdon View development where a further 20 homes will be available for private sale.
The South Hams is significantly affected by housing affordability evidenced by the National Housing Federation’s recent Home Truths report which identified that house prices are 14.3 times the average wage in the area. This impacts on the opportunities for local people to take the first step onto the housing ladder and for employers to retain and attract talent.
The Rentplus’ rent-to-buy model has been developed to help address this issue. With Rentplus, tenants pay an affordable intermediate rent which is 80% of the market rent in the local area (including service charges), they then have the opportunity to purchase their home after 5, 10, 15 or 20 years. While they rent, tenants have no maintenance responsibilities, which means they have time to save for a deposit and build a credit history that will support their mortgage application. The tenants also receive a 10 per cent gifted deposit from Rentplus when they buy their home.
Richard Connolly, Rentplus CEO, said: “We are very excited to be announcing our first rent-to-buy homes in the South Hams. Working with South Hams District Council we hope to give many more local families and working people the opportunity to fulfil their dreams of homeownership. Our model offers them the safety and security of a long-term tenure, an affordable rent, saving pathway and ultimately the chance to own a home in an area where they have already put down roots.”
“The Government’s recent Housing White Paper recognises the important role that affordable rent-to-buy and innovative housing solutions play in delivering the right homes in the right places. This first scheme will ensure Wembury remains attractive for people to live, work and invest in their local communities. We also have ambitions for further Rentplus homes across the South Hams.”
Julie Barnett, Chief Executive, Tamar Housing, said: “The gap between wages and house prices in the South Hams is just one example of the struggles families across the South West experience to get on the property ladder. Many want to own their own home, but all too often find themselves stuck in the private rental sector where they have no hope of saving for a deposit. These new rent-to-buy homes in Wembury will offer people an affordable rent, the chance to save money and the opportunity to purchase their new home in the future. We look forward to working with both Rentplus and Tamar & Provincial Properties to expand the model’s use to fit the region’s needs.”
Rentplus currently has tenanted homes in Plymouth, West Dorset, and the Cotswolds, in addition to planned new developments in Oxfordshire, Somerset, Cambridgeshire, Northamptonshire and across Devon, with many more over this year across the UK.
The rent-to-buy homes in Wembury will be available in April 2017 and information on how to apply for them can be found at www.tamarhs.org/rentplusapp.
According to the National Housing Federation’s latest study, How affordable is housing for people in lower-income occupations?, since 2002 house prices in England have more than doubled, however, average salaries have only increased by 38% during the same period. The problem is further compounded by the fact that in some regions, like London and the South East, rent can today take up over half a worker’s salary.
The chances for these people being able to save the tens of thousands of pounds required for a deposit is virtually nil. This means that a whole swathe of people are essentially permanently priced out of homeownership – unless of course they receive a windfall inheritance. The problem is further compounded by the fact that the average rent is more expensive than the average mortgage repayment in nearly half of the UK’s cities. To keep our health services and education provision running we need to be inventive and find a way of housing the people who make them tick.
The Housing White Paper signalled a fundamental break with the past in its tacit admission that single ownership is not a panacea and will not deliver the volume of housing people need. Ultimately we need a variety of tenures that over time will enable people to make the jump to the next rung on the housing ladder. Part of the solution is expanding affordable private rent-to-buy housing, which is the model Rentplus is already delivering across the country.
Rent-to-buy enables people to rent at an affordable rate – our model offers at least a 20% discount to market – while being able to back themselves that they will eventually be able to afford to purchase their home. Additionally we incentivise tenants to save to buy their property by offering them a gifted deposit of 10% of their home’s value when they go to purchase it after 5, 10, 15 or 20 years.
If local authorities are serious about retaining key workers and offering them an affordable pathway to homeownership then we believe rent-to-buy should be the first model of housing they look to. Not only does it offer them a way of keeping their public services staffed, but it also will allow them to develop stable communities that residents have a long-term stake in.
We have spent many years getting our rent-to-buy model right and now we are on the ground delivering our homes across the country. However, we understand that – as with all new ideas – proof of concept is important, as is an evidence base to demonstrate Rentplus’ contribution to meeting local housing need. In light of this, we are building up a strong evidence base to demonstrate how our homes best meet local housing need, as well as finding out where our Rentplus tenants have moved from so we can better understand the wider impact of Rentplus on the housing market. The results of the research conducted by Tamar Housing of our tenants at Palmerston Heights, Plymouth is fascinating. Over a third of the occupants were previously living in social housing prior to moving in to their new Rentplus homes. This means that these homes have been released for the local authority to house people in housing need. A further third of our Rentplus tenants have been housed from the housing waiting list.
Although it is still early days, this data indicates that the Rentplus model offers a win-win for everyone. Not only are we providing affordable homes for those who are looking for an affordable opportunity to get on the housing ladder, but it has the additional benefit of freeing up scarce affordable and social housing for people in housing need. On the basis of this evidence, we strongly believe that embracing affordable rent-to-buy will go some way to helping relieve the pressure on local authority housing waiting lists and making best use of affordable housing.
The proof really is in the pudding. The UK needs to recognise that there is more than one path to home ownership and creative solutions are required to solve the housing crisis. This early data exemplifies that affordable rent-to-buy models really do help those shut out of the housing market and puts them in the best position to own a home of their own whilst making a positive contribution to the wider housing issues that local authorities currently face.
Richard Connolly is CEO Rentplus.
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
