Category Archives: build to rent

Dev Secs buys Cathedral to create private rented powerhouse

Listed property company Development Securities has agreed a £27.4 million takeover of the Cathedral Group, creating the potential for a major new brand in the private rented housing sector in London. The two have previously worked together on projects, and saw the combination as a natural fit.

The deal adds nine development sites to the Dev Secs portfolio, and brings on board the Cathedral team with its track record of developing mixed use, residential led projects specifically in London and the south east. Dev Secs, being listed on the UK stock market, has stronger access to development funding.

The acquisition means Dev Secs now has seven new sites under its control:
the Telegraph Works in Greenwich
Morden Wharf, Greenwich
The IP Global project in Deptford
St. Mark’s Square in Bromley
The Old Vinyl Factory, Hayes
Circus Street in Brighton
Spirit of Sittingbourne in Kent
There are two further sites currently being acquired, but with deals not yet inked, at The Albany in Deptford, and Preston Barracks in Brighton.

Noted the company in a statement: “Six of the above developments have funding in place to execute the relevant business plans, three have achieved detailed or outline planning consents, and planning applications have been submitted in respect of a further two of these sites.”

Cathedral chief executive Richard Upton commented: “We already have a successful history together through our existing joint venture partnerships at The Old Vinyl Factory and Morden Wharf and our completed development at The Movement, Greenwich. We are confident that the integration with Development Securities will provide a stronger platform as we progress our existing portfolio of developments towards completion, and secure additional projects to further contribute to the growth of the company.”

Dev Secs has been in discussions with housing association London & Quadrant about growing a private rented sector portfolio together, involving potentially six sites around London, and up to 800 homes – details here.

In January, Dev Secs hired agent JLL to look for a development partner – details here. It is unclear whether the combination with Cathedral means it will now no longer look for additional partners to work with.

Among Cathedral’s projects is a private rented sector development in Deptford, south east London. This was recently forward sold to investor IP Global – details here. It would appear that, in this instance, Cathedral had insufficient access to funds to develop the project and retain it, instead relying on an advance sale to IP. Now, with the greater access to funds that Development Securities provides, it is likely that similar projects will be developed and retained within the group’s private rented sector portfolio.


Taskforce calls on local authorities to build to rent

The Government’s Private Rented Sector Taskforce will be encouraging local authorities to invest in local built-to-rent schemes, as it moves into its second year of existence. Alongside a continued push to get major investing institutions to see the sector as somewhere they need to allocate funds long term, there will be further attempts to get housing associations more active in the private rented sector.

These initiatives have been outlined by Andrew Stanford, head of the taskforce, as key actions for year two of the group’s existence. “We want to work with councils to see how they can encourage or invest in build-to-rent schemes in their areas,” said Stanford in his end of year report, published recently in Property Week magazine. Despite the success of Help to Buy, which has encouraged greater building of new homes for first time buyers, “there is clear demand for high quality rented accommodation available on flexible terms”.

Stanford reflects on positive first year for PRS Taskforce

Stanford reflects on positive first year for PRS Taskforce

Housing associations have been slow to get involved in the private rented sector, with a few notable exceptions. Even those who are building for private rent often see it as only a minor adjunct to their main business of creating subsidised, affordable housing. Among those taking the leap is Genesis, which recently won the largest slug of money yet awarded from the Build to Rent fund, for around 500 new homes build for the private rented sector. “There is a lot of expertise in the social housing sector,” says Stanford, “and I want to work closely with landlords to see how they can use that to help meet the growing need of their communities for flexible, affordable private rented accommodation built to a high standard.” Stanford himself has recently joined the board of housing association Orbit Group – so expect them to commit to build more private rented homes soon.

Looking back on a successful first year for the task force, Stanford notes that the £1 billion Build to Rent scheme, effectively providing pump priming loans from the Government, has helped with schemes already under construction. A further 36 projects have been shortlisted for support, and will complete initial vetting in May 2015.

He also points out that planning guidance now encourages housebuilding for private rent. And initiatives such as the Urban Land Institute’s design guide, and a code of practice for the rental industry, are helping to raise professionalism and standards all round.

“The work of my task force is to encourage institutions to consider this growing market as a place to invest,” promises Stanford.

Grainger buys in London but eyes up the regions

Leading residential landlord and investor Grainger has indicated it will now look to the UK regions for future private rented sector investments – just as the company announced it has bought a £160 million residential portfolio in central London.

The latest deal has bought Grainger 61 properties in Kensington and Chelsea, the heartland of smart central London. The houses in the purchase are valued at less tahn their vacant possession value, as 45 are subject to regulated tenancies, while 13 are let on assured shorthold tenancies and 3 are empty.

“This is a rare and exciting opportunity,” said Grainger chairman Andrew Cunningham. “It is a very attractive portfolio in one of the most prestigious locations in London and it includes a high concentration of regulated tenancies, a sector in which Grainger has had a long and successful history of investing. Leveraging this experience and the skills within our unique operating platform to manage and enhance residential property, I am confident that we will generate significant value from the portfolio on behalf of our shareholders over time.”

The company has hinted that it may well sell individual properties as they become vacant, or look to redevelop where suitable, taking advantage of house price rises in London’s raging residential market. Grainger used existing finance facilities to purchase the portfolio, and still has more than £200 million of firepower to use in the market, should it wish.

And that firepower may well be deployed outside the London area, if a report by publication Inside Housing carries weight. They report that Grainger now sees better opportunities in the regions, “in particular in build-to-rent and private rented sector developments” as economic recovery takes hold. An unnamed Grainger source says competition is high in the capital, with a large volume of money chasing a small volume of deals in London.

Agents have recently reported that price rises in London mean investors can now get a better return on private rented property by purchasing in the regions, as previously reported by Resimarketnews here.

Innovative joint venture delivers rental housing in London Docklands

Private rented homes will form the centrepiece of a new development in London’s Docklands, set to transform the Canada Water area south of the River Thames and east of central London.

An innovative deal involving developer Sellar Design & Developments and housing association Notting Hill Housing will deliver around 1,000 homes, of which just over one third will be for long term private rent. There will also be 453 apartments for sale, and 162 units for the affordable housing sector ie destined for tenants on local authority waiting lists. There will also be 69 units for shared ownership occupancy.

By combining private rented homes with housing built for sale, it will be possible for the developer to accelerate the construction programme for the whole project – something that is bound to give other developers with major residential schemes food for thought. “It condenses a development programme from what could be nine years to, say, five years,” said James Sellar, chief executive of Sellar Design & Development, speaking recently to Property Week.

Sellar and Notting Hill Housing project at Canada Water

Sellar and Notting Hill Housing project at Canada Water

Apart from the financial benefit to the developer, the increased pace of development should also benefit residents. Those who move in early will see all the elements of the scheme – including retail and commercial space and a sports and health centre – finished much more quickly, rather than waiting for potentially years for the developer to complete sales.

Both Sellar and Notting Hill will provide equity funding to start the project off, with a further loan from Notting Hill. The housing association has committed to buy the completed private rented sector homes, giving the developer the flexibility to start work more quickly on other phases such as the flats for sale.

The first block of rental apartments should be ready for renting in 2017. Designs for the project are by architects David Chipperfield and Maccreanor Lavington, and will include a 40 storey landmark tower. One key to unlocking the site, is the relocation of a Decathlon superstore, which will move to a new purpose built block within the new scheme.

Kate Davies, Chief Executive of Notting Hill Housing, commented: “The project marks a significant move in our ambition to create more quality new homes across central London and, in particular, to expand our ‘open market rent’ portfolio. This scheme will represent our largest ever development of new rental homes and will increase our exciting offering by almost 50%.”

James Sellar promised: “The scheme will provide a truly striking development in the heart of a previously overlooked part of London as well as creating a new town centre for Canada Water.”

Olympic Park opens with rental homes on its perimeter

The Queen Elizabeth Olympic Park in Stratford has opened this weekend – and it’s the ideal backyard for sporty renters……

Queen Elizabeth Olympic Park

Queen Elizabeth Olympic Park

The park opens onto Get Living London’s new rental apartments in the former Olympic village, and gives local residents and visitors access to the park and to sports facilities including the Olympic swimming pool.

“With the Olympic Park reopening, this is a unique chance for renters to move to a quality new home with world-class sports and leisure facilities on their doorstep,” said Get Living London’s chief executive Derek Gorman.

Prices at East Village start at £310 per week for a one bed apartment, with four bed townhouses from £550 a week – more details here.

£45.5m Build to Rent deal agreed with Genesis Housing

The largest deal to date under the government’s Build to Rent deal has been signed with Genesis Housing Association. The agreement, the fourth under the government funding scheme, will support 485 homes being built in Chelmsford, Barnet, Newham and Ealing.

In each case, the built to rent homes will be part of mixed projects, alongside social rented housing(the lamentable phrase “affordable homes” is still being used in the press release) and homes built for open market sale.

The majority of the homes will be at the former Anglia Ruskin University site in Chelmsford, where Genesis plans 130 one bed and 113 two bed homes. At Grahame Park in Barnet there will be 196 homes, of which it is promised 22 will be three bed homes. There will be 25 units in Ealing and 20 in Newham.

London mayor Boris Johnson commented: “With London’s population soaring, and to help address a 30-year failure to build enough homes, we have set the most ambitious house-building targets in City Hall history. The private rented sector has a huge part to play in this. More well-designed, good quality homes to rent will help rebalance the capital’s rental market, improve services for tenants and stimulate new development and economic growth as well as providing the new homes that hardworking Londoners so desperately need.”

Build to Rent eventually promises £1 billion of lending to the private rented sector, in a series of loans that the government is providing to pump prime the PRS. The money is advanced on a site specific basis, and only on the proviso that it will be repaid with subsequent institutional investment, once the homes are fully rented. A

Until today, two projects in Southampton and Manchester are under way with Build to Rent support, while a third scheme covering 190 homes was signed last week. This will see Mill Group buying homes delivered by housebuilder Bovis Homes, and received an £8.77m advance. More on that here. These projects are from the first round of projects submitted for financial support. A second round of 36 further submissions was received earlier this year.

John Carleton of Genesis commented: “We are delighted to be partnering with the government to deliver a much-needed supply of high quality housing in London and Chelmsford via the Build to Rent programme. It will broaden the diverse range of housing solutions that Genesis offers to people from all walks of life.”


First PRS development from Regal to be in Dalston

Residential developer Regal Homes has revealed it will be making a move into the private rented sector, with its latest development. The company is planning a 101 apartment development in Dalston Lane, east London, and has applied for support funding for the project from the government’s Build to Rent programme.

Regal is a private sector residential developer that has completed around 1,000 units in the London area, since launching in 1998. Upcoming apartment developments include The Residence in West Hampstead, and 50 apartments at Banyan Wharf in Shoreditch.

Regal’s Simon De Friend told Property Week: “Our target market sector will be both young professionals, who will need convenient access to central London and young families, who are at risk of being ‘pushed out’ of the local area.”

Places for People revealed as second Bovis Homes partner

Places for People is the second organisation to team up with Bovis Homes to deliver 510 new homes for rent around the UK. The deal, revealed by Resimarketnews here, involves Mill Group taking 190 homes from the housebuilder, mostly on sites in the south east, while Places for People will take on 319 homes on ten sites in the Midlands and north.

The £35.5 million deal sees PFP buying the homes, which will be managed by Touchstone, its private sector rental management company. Savills were involved in assisting Bovis Homes in setting up the financial side of the transaction, which will utilise sites already in Bovis’s land bank.

PFP’s chief executive David Cowans commented: “There is a growing demand for high-quality homes for rent and we are keen to continue to offer more new build houses and flats such as these for private rent, particularly at a time when affordability is at the top of most people’s agendas.”

Places for People is essentially a housing association group, delivering affordable homes for rent, to house tenants via local authority routes. Through its Touchstone subsidiary, the organisation is also offering a growing portfolio of private rented sector homes at market rents.


New guide promises better designed rental homes

The Urban Land Institute has launched a new design guide, to help developers and builders create better homes that are designed from the outset for renters. Should it be adopted widely by the industry, then renters of the future will have far better homes to live in, compared with the frequently indifferent choices they face today.

The guide underlines the importance of building high quality homes, with supporting facilities and great customer service. It covers location, scale, exterior, interior and public spaces, and how living in a properly designed rental home should be a great experience.

The project has been supported by the government’s Private Rented Sector Taskforce, and guided by Nick Jopling who, apart from being executive director of property at major landlord Grainger, is chair of the ULI’s Residential Council. “Our ambition is for this to become a benchmark for everyone involved in the design, delivery and ownership of Build to Rent property,” he said. “It is not a house building manual. It tackles what has to be done differently for the successful delivery of high quality and wide ranging UK build to rent housing.”

Russell Pedley, a director at Assael Architecture, added: “Our research has enabled us to draw out the design differences, that not only identify the efficiencies that help improve the viability and durability of build to rent. It demonstrates that with the right approach, it can help foster communities in a building that are easy and fun places to live for singles, couples and families.”

It is hoped that the guide will become as widely adopted as the British Council for Offices Specification Guide, a private sector initiative that has substantially improved standards of design in office projects, reducing overspecification and wastage at the same time.

More on the guide, and how to order a copy, here.

Bovis to build 510 private rented sector homes

Housing developer Bovis Homes has won two contracts to build new homes for the private rented sector. Between them, the two deals will see the company deliver 510 homes across sites in the UK, through 2014 and 2015.

It also means Bovis can sell off some older plots in its land bank, some of which have already been written down in its accounts. Without this deal, there is a clear indication that the private residential sales market is not lively enough or profitable enough to have had the company building out these plots for sale, within the next couple of years.

One deal with Mill Group involves 190 homes, of which 110 will be houses, to be delivered on sites in Horsham, Bristol, Brockworth, Southampton, Cambridge and Hemel Hempstead. The £45 million joint venture has Mill as the majority owner and is supported by £8.77 million funding from the government Build to Rent scheme, and senior debt from RBS. Bovis will put £1 million in, and advance £4 million as a loan. The homes will be completed over the next 18 months, and will be rented and managed by Investors in Homes Management, a Mill Group subsidiary.

“This new joint venture forms a key part of our strategy to build a significant PRS portfolio and demonstrate our commitment to structure, source, finance and invest in the right opportunities,” said Mill Group chief executive David Toplas. “There is a significant, well-recognised shortage of homes and an ever-growing need for good quality, affordable rental accommodation, and this deal will help tackle that. We are delighted to play our part to encourage greater institutional investor participation, ultimately helping to spur an increase in supply of private rental homes.”

For Bovis, the deal puts some of its existing land bank into action, bringing forward mothballed sites for construction, and delivering it better returns than if the sites continue to be held for future development and sale individually. Says a company statement: “These homes will be delivered over and above the group’s prevailing private sales, accelerating the development on each of the sites included without sales risk, with an average housing profit margin which is not expected to dilute the group’s anticipated operating margin in 2014 and 2015.” The units will be counted in Bovis Homes’ reported completion figures.

Details of the second deal, involving 320 homes, are not immediately clear. However, for Bovis, this will enable it to shift new homes on sites mainly in the Midlands and north. The company says the deal will enable it to “accelerate trading” through several older sites, “some of which are written down”.

“We are delighted to have agreed these two private rental sector deals which provide the opportunity to deliver over 500 additional new homes during 2014 and 2015,” said David Ritchie, chief executive of Bovis Homes. “Through achieving ths, Bovis Homes is accelerating delivery across a number of existing housing sites and enhancing shareholder returns.”