Monthly Archives: June 2014

Be:Here bids to join the leading brands in private rented sector

Be:Here, the private rented sector development arm of construction group Willmott Dixon, is another new brand looking to make its mark as a professional landlord in the blossoming sector.

The company, which is on site with projects in Hayes, west London and in the London Docklands, will build apartments specifically for renters. And speaking at May’s Forge event in central London, the company’s operations director Simon Chatfield explained some of the company’s thinking.

“At the moment, the PRS is not delivering what renters want,” he insisted. Its ideal is to build two bedroom apartments with equal size bedrooms, ensuite bathrooms and walk-in wardrobes. “We’ve got a pretty good idea what renters want,” he added. “It works incredibly well for people sharing.”

 Be:Here's London docklands development is under construction

Be:Here’s London docklands development is under construction

The sector will continue to be dominated by small, buy to let landlords, he predicted. “But you are going to see the emergence of branded landlords.” These brands will provide longer leases, create private rented communities, and deliver a range of value added services, taking care of dry cleaning and other community support items.

One issue the sector faces, he noted, is competing with developers building homes for sale. PRS has to fight for sites, bidding against those delivering into a frothy residential sales market. “This is our biggest challenge right now, we think it’s viable, but it’s competing for land in a market that’s overheating.” The lack of any distinction in planning terms is one issue holding back the growth of the sector.

Be:Here believes their market is in London, and in suburban locations with up to a 45-60 minute commute to the centre. However, Chatfield cautioned about trying to build too densely in locations where there would, ultimately, be insufficient value.

The company has just completed a forward sale to long term investment clients of Invesco, at its Hayes development – details here. Speaking at the announcement, Andrew Telfer, who heads Willmott Dixon’s development division, gave a clear commitment to the scale he sees Be:Here developing in the PRS market:  “We see this type of investment at scale as an essential part of creating a more sustainable housing market in the UK.  It’s also an important milestone for be:here in its plan to create over 5,000 PRS homes over the next few years, something we are well on track to accomplishing with this and further projects now in the pipeline.”

Fixing the housing crisis – Anthony Hilton

Councils need to be put in a position where they build more homes. The boost would help deliver more housing, and reduce demand  pressure on the private sector, dampening price rises.

That is the recipe from Anthony Hilton of the London Standard, who in a recent column noted that last year, London councils built barely 1,000 homes. “That… is why we have a housing crisis,” he declared, pointing out that in the 1970s the country delivered more than 300,000 new homes most years, of which half were built by councils. The peak, 1970, saw councils build 176,000 homes.

Yet the current government has spent just £5 billion, mostly via housing associations, on building new homes; while it has spent £95 billion on housing benefit, “which is a welfare subsidy to families to help them meeting housing costs”. Almost a fifth of households are receiving this subsidy in some form.

More money invested with councils and housing associations, to help them to build more, would help to bring down rental costs – and so cut the housing benefit bill, argued Hilton.

He also poured scorn on government suggestions that self builders could help solve the supply shortfall. Ideas that 50,000 homes a year could be built this way are crazy, he said: “I am all for people being encouraged to build their own home, but the idea it could provide a solution to Britain’s housing crisis is risible and what is truly depressing is that someone in charge of policy seems to think it could.”

Self builders face massive challenges, he points out. They have to afford to buy a suitable piece of land, paying cash up front in competition with better funded developers; get planning permission; obtain a mortgage from banks and building societies who are wary of self-build; and find a builder with the skills to carry out the project – when many have closed or lost their skilled tradesmen in the last recession.

Invesco commits £33m to private rented sector with Hayes buy

Investment manager Invesco Real Estate has agreed to forward purchase a £32.5 million private rented sector investment in Hayes, west London. The deal with Be:Here, building group Willmott Dixon’s private rented sector developer, will fund the development of 118 flats that will be ready for renters in 2016.

Invesco has made the investment in what is called the Gatefold Building, on behalf of an unnamed local authority pension fund.

Be:Here will develop the Gatefold Building, with Invesco’s backing

The site has been through a number of hands recently, with Be:Here purchasing it from previous joint owners Development Securities and Cathedral Group in December. Dev Secs and Cathedral bought the 18 acre Old Vinyl Factory site in Hayes in 2011, and have secured permission for a major comprehensive redevelopment including more than 600 homes. In recent months, the pair have agreed a merger, and have plans to develop their own private rented sector homes within the project boundaries.

Be:Here will develop out the site in Hayes, and will manage the units on an ongoing basis following completion. The company has another site, in east London, and will now be able to recycle the cash from the Hayes project into building up its portfolio.

While the project is Invesco Real Estate’s first commitment to the UK private rented sector, the company has already committed funds to similar projects elsewhere in Europe. Around £106 million has been spent in Germany, supporting two multi-family housing projects, and new director of residential investments John German is keen to do more.

“We believe it is paramount to form partnerships with developers who are able to create viable investment opportunities in this sector and we are therefore pleased to be partnering with Be:Here, an experienced developer, who has a strong track record of delivering similar high quality schemes in Greater London,” said German. “We hope that this will be the first of a number of similar transactions with Be:Here.”

“IRE believes that the greater London residential market remains one of the most important real estate markets in the world for occupiers and investors, creating long-term demand and liquidity for high quality products. We expect investments in this market to out-perform the mainstream UK residential market.”