Category Archives: housing association

London & Quadrant grabs Nine Elms PRS flats

Housing association London & Quadrant is in pole position to purchase the innovative private rented sector part of a larger housing scheme in Nine Elms, London.

The £65m deal will see L&Q take over 114 apartments which are part of house builder Bellway’s redevelopment of the Christies Fine Arts warehouse. The private rented flats were part of a combined project of 510 homes, which includes market homes for sale, and an affordable housing element.

The private rented sector element of the project was accepted by planners as a contribution towards the section 106 benefits of the scheme – see details previously reported here. The project was approved by Wandsworth borough in London, which has set out to take a proactive stance to promote private rented housing, and will review project details accordingly. As a result the tenancies will only be available to renters who have a local connection, while lease periods of up to five years will be offered, to provide security of tenure.

London & Quadrant is one of the few housing associations to have made clear its desire to get into the private rented sector. Last year, the company said it wanted to generate a £1 billion fund to invest in the sector. However, progress has been slower than planned – in 2012, L&Q was quoted in the publication Inside Housing as aiming to assemble a 1,000 strong private rented portfolio within three years.

Fizzy Living picks up £32.4m refinancing

Private rented sector landlord Fizzy Living has agreed a refinancing of its four current projects in its portfolio. Pricoa Mortgage Capital has agreed the £32.4m package that will fund its current live projects, freeing up capital to further grow the business.

The deal shows how strong the demand is from funders, for well let private rented homes. “This portfolio offers a compelling combination of excellent quality assets, good locations and stellar sponsorship,” said Aaron Knight, director of European debt obligations at Pricoa Mortgage Capital. “For the foreseeable future, our appetite for portfolios like this one will exceed the supply and we look forward to seeing more opportunities in this space and to the expansion of our relationship with Fizzy over the coming years.”

Julian Turner, deputy finance director and head of treasury at Fizzy’s parent company Thames Valley Housing, revealed that the deal provides low rate finance over the medium term: “With interest rates at historic lows, this debt funding has been put in place at under 3% over ten years. This is made possible as Fizzy has already established a solid track record and is generating performance that not only satisfies but attracts the senior debt market. Its portfolio is operating at optimum level in a market that is poised for further substantial growth.”

Geeta Nanda, chief executive of TVH, commented, “This is another great first for Fizzy and Thames Valley Housing. Having first shown that PRS is deliverable in the UK, this demonstrates that the strength of the Fizzy model is extremely attractive to equity and third party debt investors alike. We are delighted to have conducted this debt package with Pricoa Mortgage Capital who are a new player in the market, and hope that it will be the beginning of a long term partnership.

It was in March 2014 that Fizzy agreed a £200m funding package from Silver Arrow, part of the Abu Dhabi Investment Authority, to support its expansion. To date, the brand has flats to rent at sites in Poplar, Epsom, Canning Town and Stepney Green.

Internos aiming to create £2bn private rented housing fund

Internos Global Investors is teaming up with Catalyst For Homes to find ways to attract more institutional money into the private rented sector

The fund manager is already working with C4H on a major investment project, with the target of creating a fund with up to £2 billion in final value. It aims to buy into a mix of private rented and social housing across around 15 sites in the greater London area.

The pair are sizing up sites ahead of construction, aiming to select those most appropriate for institutional investment in long term private rented sector housing. They have set an initial 30 year timeline for the projects, with the aim of satisfying investors who not only look at property, but also hoping to draw in infrastructure and fixed income investors.

“According to Investment Property Forum seminal research in 2014, the UK private rented sector is worth around £837 billion, of which only £18 billion – 2% – is currently in the hands of institutional investors, the vast majority being held by private amateur landlords,” said Andrew Taylor, head of residential investment at Internos. “This compares to the UK commercial property market where more than 56% of the £647 billion estimated value is owned and professionally managed by institutions.”

“This disparity provides a significant opportunity to grow institutional investment with professional management in this previously overlooked market. Couple this with a worrying outlook for global equity and fixed income returns and the UK residential market provides an attractive proposition for risk-averse / return hungry investors.”

Catalyst For Homes was established in 2010 as a community interest vehicle, with a blue chip board that aims to change the way homes in the UK are held by investors. The board includes Clive Bird, formerly of Taylor Woodrow and Berkeley Group, and Adam Sampson, former CEO of housing charity Shelter.

Adam Sampson, executive chair of C4H, added: “The returns from residential investment over the past decade have significantly outperformed comparable markets.  The alliance with Internos provides an opportunity for increased access to this market for investors at the same time as addressing the desperate shortage of affordable housing which affects both individuals and the economic health of the nation.”

Rental prices outside London now higher than in capital

Areas in the Home Counties are now more expensive for those renting their home, than areas of Greater London. A new survey reveals that four districts in the South East see private renters typically paying more than half of their income out in rent.

Three Rivers, South Bucks, Oxford and Forest Heath top the ranking of the 20 most expensive locations outside London. In Three Rivers, north of London, renters typically pay 54.3% of their income out on an average monthly rent of £1,372 per month. Even in East Dorset, ranked twentieth in the league table drawn up by the National Housing Federation, renters are paying out 43.1% of their income in rent.

rentercosts

The figures provide a contrast to those recently drawn together by Homelet, which showed how some cities away from London still provide great rental value for tenants. Private renters in Plymouth, for example, pay just 27% of their income in rents, while Welsh capital Cardiff offers good value with rents typically 29% of incomes.

NHF works to support housing associations, and blames the increasingly unaffordable rent levels on a fundamental shortfall in housing provision. It is lobbying the government to solve the shortfall in housing construction in the UK. Unless something is done, rents will continue to rise, it warns.

“Private renters today are getting a raw deal and are paying the price for a housing crisis that’s been decades in the making,” said NHF chief executive David Orr. “Unless we build the affordable homes we desperately need, ordinary working families and young people will continue to struggle to pay their rent, and will have less and less money left to cover basic bills like food and heating.
“We need a long term plan from politicians to put this right. We’re calling on all political parties to commit to end the housing crisis within a generation.”

Notting Hill Housing launches PRS brand

Housing association Notting Hill has launched a dedicated private rented sector brand. Folio London will be taking over the organisation’s private rented housing business, which first began in 2007.

The move comes as an increasing number of housing associations are weighing up their options around market rental. The association joins Thames Valley Housing, which operates Fizzy Living, in having a dedicated – and separate – brand. Fellow housing association A2 Dominion is also preparing to launch a fresh brand, Fabrica, to take forward its market rent and build for sale activities. As registered charities, housing associations are generally focused on creating subsidised, “affordable” housing, but as sources of funding, such as government grants, reduce, they are increasingly looking at other ways to create funds to support those core activities. A profit made from rental housing can therefore be judged as a relevant way to support further construction of affordable housing portfolios.

Notting Hill has said that a project in Marine Wharf, Surrey Quays will be the first development under the Folio London name. The housing association will be developing and managing 374 flats for private rent in a partnership development with Sellar Design & Development, though the first flats will not be available to rent until 2017.

Folio London will take forward Notting Hill Housing's PRS activities

Folio London will take forward Notting Hill Housing’s PRS activities

“It’s important that we distinguish our offer in London’s very competitive private rented sector,” said NHH chief operating officer, Andy Belton.

“Our approach is straightforward – there’s no hard-sell from our dedicated team as we don’t work on commission. Early next year we will add web services for existing residents to report repairs and make payments.”

Belton noted that Notting Hill is no newcomer to the PRS: “We set up our private rent business seven years ago and today we have a portfolio of 800 homes. Depending on market conditions, we will add up to 1,000 new private rent homes in the next five years, from our overall development pipeline of 7,000 units.”