Category Archives: private rented

ryanprince

Call for planning changes to support private rental

Ryan Prince, CEO at Realstar Living, has renewed calls for a change in the planning system, to support the development of dedicated private rented sector homes. Until such change happens, he insists the economics of development means not enough homes for rent will get built.

Prince says the private rented sector could probably add around 500,000 homes right away, and if rents were in the range of up to £1,000 per month, they would be full immediately. “So, why don’t we have it today? The answer is planning policy.”

Writing in Property Week magazine, he argues: “At present, the planning system is geared towards ‘private for sale’ (expensive) or ‘affordable’ (council housing for those in dire need). There is nothing of note for the independents in the middle.”

These “independents”, also called the “squeezed middle” by affordable home developer Pocket, are people in regular jobs, who in London can typically be earning between £25,000 and £45,000 a year. Working on the rule of thumb that no-one should be paying more than one third of their gross income in rent means, says Prince, a practical maximum of £1,000 rent per month.

With rental home builders such as Realstar fighting for development sites against housebuilders constructing for sale, there is little opportunity to buy land at a price that makes financial sense to build for these mid market renters.

Prince says his company does have one 225 unit apartment block in Stockwell, south London, that fits this description of “indy” housing. The block is full, at rents of around £250 per week. But he says he was only able to win the site “because of a quirk of history” that meant it had a sui generis flexible planning use – meaning no housebuilders could grab it.

The solution, says Prince, is for London’s next mayor to amend the planning system, either creating a definitive new use class for rental housing, or varying the current rules. He also wants to rename rental homes as “indy housing”, in place of PRS.

New Bailey development, Manchester

L&G invests £16m in Manchester PRS development

Legal & General has forward funded a development of 90 apartments for rent in central Manchester. The 10 storey block will be part of the New Bailey mixed use development, which English Cities Fund and Muse Developments is promoting on a site behind Spinningfields.

L&G won the £16 million project after open market bidding. The site already has planning permission, though some design revisions are now likely to make it better suited to long term rental block management. The scheme designed by architects AHR could start on site this autumn, with the potential for tenants to be moving in to the mix of one, two and three bed apartments before the end of 2016.

“The renaissance of Salford is one of the best success stories in UK urban regeneration,” said L&G’s director of direct investments, Laura Mason. “Situated in a waterside location, within walking distance of Manchester Piccadilly and 200m from Salford Central, we have the ability to provide a new class of rental accommodation, based off fair value rents but with a higher quality offer, and greater tenant service and flexibility.”

This is L&G’s second private rented sector investment, as the company recently took on a regeneration site in Walthamstow, east London where permission has been granted for more than 300 flats. The investor has said it will put up to £1 billion into rental homes over the long term, and is seeking an investment partner “with like-minded international capital” to grow what it expects to be a significant portfolio of private rented homes across the UK.

 

Proposals for the new Brent Cross development

Argent and US developer Related head into UK rental market

Established British development company and US developer Related have formed a joint venture to tackle major mixed use projects in the UK. The pair, working under the brand Argent Related, will be looking to grow a rented housing element to schemes they involve themselves in, drawing on Related’s US experience, where the company has more than 50,000 homes for rent.

Together, the two partners will pursue large schemes, building on Argent’s experience of creating urban spaces around the UK in locations including King’s Cross and Birmingham. “Related’s industry leadership in such areas as sustainability and construction supply chain, and expertise in developing and operating their portfolio of more than 50,000 build-to-rent homes in the US, will enable us jointly to deliver a significant contribution towards the homes London and the UK desperately needs,” said Argent managing director David Partridge. “Together we will be able to complete projects with the scale and impact to make a real difference, and keep Argent at the forefront of the UK property sector.”

The joint venture has already been selected by Barnet Council to deliver a substantial mixed use development on a 192 acre site south of Brent Cross Shopping Centre in north London. The pair expect to start work on the project in 2017, using a masterplan already prepared by architects Allies + Morrison; the site already has a planning permission for around 7,500 homes, 350,000 sq ft of retail space and 4.2 million sq ft of commercial space.

Residential property will be a key part of the pair’s interests – as the launch statement made clear: “Argent Related will develop open-market and affordable housing, offices, retail and leisure space, and hotels, with a commitment to sustainable and sensitive development. Drawing on Related’s extensive experience in build-to-rent developments and strong management capability in the United States, the venture will place a distinct focus on purpose-built rented homes, where the company sees great opportunity in the market.”

A flavour of what is to come can be gleaned from a visit to the Related Rentals website, where the company leases a range of luxury apartments and offers tenants a wide variety of supporting services.

Difrent-Sigma-Capital

Sigma expands £1 billion PRS finance

Urban regeneration specialist Sigma has expanded its arrangement with Gatehouse Bank, to finance its expanding rental homes portfolio. Gatehouse will now support Sigma towards a larger target of 10,000 rental homes, to be developed over the next five years.

Sigma, which is listed on the AIM junior stock market, is already under way with a first phase of homes across Merseyside and Greater Manchester, investing around £106 million. A quarter of the planned 927 homes are already built or under way, with the first tenants having moved in to their homes in February 2015.

Sigma is working with Countryside Properties to deliver the homes, and is working with Direct Lettings (part of Shepherd Direct and linked to the Century 21 estate agency chain) to arrange rentals. It has also created DifRent, a lettings brand as its customer facing name.

“This is a significant moment for Sigma, which brings to fruition the work we have done with our local authority partners, Gatehouse Bank, Countryside and Shepherd Direct to establish our Private Rented Sector model,” said Sigma chief executive Graham Barnet.

“I would like to express our thanks to all our partners for their support. We see considerable potential to create one of the largest new build privately rented residential portfolios in the UK and I am delighted that construction of the first phase of over 900 new homes for rent across Greater Manchester and Liverpool is now starting.”
“We believe the joint venture with Gatehouse and our new partnership with Grainger plc firmly establishes blueprints for further large scale housing programmes across cities throughout England with other partners and additional local authorities.”

ealingbroadway

British Land plans rental homes in Ealing

Landlord British Land will create 55 apartments for rent, as part of its makeover of the Ealing Broadway shopping centre. The flats will be converted from redundant office space at 54 Ealing Broadway, while adjacent offices and shops will be improved as part of the project.

Unusually for a commercial property company, British Land has committed to becoming a long term residential landlord. Its proposals state: “We will own and manage homes for rent, accommodated above the shops and in two additional floors on top of the existing building. These homes will help address local rented housing needs, provide a variety of homes for town-centre residents; and continue to be owned by British Land, which will be responsible for their up keep and condition.” As well as the additional floors, Crystal House will also be reclad in brick, removing the dated mirror glazing currently on the site.

British Land’s decision to convert offices in Ealing to flats for rent is not unique. Schemes at 64 Broadway and 16-20 New Broadway have recently sought similar conversions. The area is something of a residential development hot spot, with upcoming rail connectivity improvements via Crossrail, and nearby Berkeley Homes is building its Dickens Yard development with apartments for sale.

The company has spent the last few years gaining full ownership of the shopping centre development and its connected buildings, buying in separate ownerships to assemble the site.

 

 

French PRS market sees listing

A landlord that owns more than 7,000 homes in France is to list on the stock market there. The move will raise EUR370 million for Powerhouse Habitat, allowing for further growth of the company’s EUR1.2 billion portfolio.

The move is the first step in a process of creating a tax efficient Reit (or real estate investment trust) and will create France’s first listed residential landlord. Some are suggesting the French market will now follow that of Germany and France, with increasing institutional investment in the residential housing market.

Powerhouse Habitat is owned by parent company TwentyTwo Real Estate, which was established in 2013 to invest in a variety of property sectors. To date, it has focused on France, but is now looking at other European opportunities. The initial Powerhouse Habitat rented property portfolio contains 7,140 homes across France, which are all rented to energy company EDF, for subletting to workers at its power plants.

 

 

Angel Gardens will include a 36 storey tower

Moda finds private rented funding with Apache

Private rented sector developer Moda Living has agreed a joint venture with a Middle Eastern funder that will allow it to start building apartments for rent in Manchester and Leeds.

Funding from Apache Capital Partners has been agreed for a potential £1 billion joint venture, kicking off with Moda’s 458 apartments at its Angel Gardens development in Manchester which has backing of £130 million from Apache.

Moda is a joint venture between Caddick Developments and Generate Land, and the pair are assembling a pipeline of projects around the UK to build further rental apartments. These include:
• Vauxhall Sky Gardens which will create 240 apartments in London, for completion in 2017
• Liverpool Waters with 325 flats in a 40 storey tower, due to complete in late 2017
• Quarry Hill and City One in Leeds, with the potential for more than 1,900 apartments.

The pair are already talking about building scale, before considering an exit possibly via a Reit, or an IPO on the stock market.

More on Moda here.

PRS in figures – the numbers are growing

Major changes are afoot in the UK’s private rented sector, as institutional investors and a wide range of professional landlords start to make their presence felt in the business.

So, how big is the sector at the moment? And what are the other key metrics in the private rented sector right now? Thanks to Housing Matters, who in their March 2015 report, provided the following statistics, gathered from a range of sources including the government, Savills, the CML, the Association of Residential Letting Agents, and BDRC.

4.9 million – the number of UK households today in the private rented sector

84% – percentage of tenants who say they are satisfied with their accommodation

£27.4 billion – gross buy to let lending

56 – average age of a UK landlord; they will have around 8 properties, and have been a landlord for 15 years

close to 2 million – number of private landlords in the UK

19% – number of UK households in the PRS

2.5 years – average length of a private rented sector tenancy

2.8 years – average time a family stays in a private rented sector tenancy

1 million – number of additional private rented sector homes that will be needed by 2018

Amstone Developments plans more than 600 apartments for rent in Salford

Investor sought for major Salford PRS development

North west developer Amstone Developments has launched a search for a development partner to help fund its £130m private sector rental development in Salford, named Clipper’s Quay.

Agent Savills has been hired to seek out a funder and potential long term investment partner for the project, which includes 614 flats. The scheme won planning permission last year for a new build project on the site of a former cinema at Salford Quays. Also included in the development will be more than 17,000 sq ft of retail space, reports Property Week.

The Clipper’s Quay development is in Salford, close to Media City and the recently relocated headquarters of the BBC.

berewood

Grainger adds two Hampshire PRS projects

Grainger has won planning permission for two major build to rent developments in Hampshire. The schemes, at Berewood, Waterlooville and Wellesley in Aldershot will deliver 212 homes for rental.

The projects are both phases of larger phased residential developments, and have been brought forward from a planned start date that would have been years into the future. The permission at Berewood an innovative planning agreement with the local authority – another demonstration that planners can help unlock PRS projects in their neighbourhoods.

“These new build-to-rent developments will not only deliver much needed new homes in the local area but also support our desire to provide purpose built, quality private rental accommodation as well as accelerate the provision of amenities for the community as a whole,” said Grainger executive director Nick Jopling.

“Today’s news supports Grainger’s strategy to grow its market rented business and our increasing focus on investment outside of London, where we have extensive experience managing residential portfolios. Grainger is committed to the market rented sector where we can bring our long and established track record of managing homes to the highest standards for people across the UK for the benefit of all our stakeholders.”

At Berewood, Grainger has reacted to local market conditions. Local authority Winchester Council saw a major increase in the number of privately rented households in its area, up 50% between 2001 and 2011; an even more dramatic 100% increase was observed in neighbouring Havant. A deal with planners sees 104 new homes built with a guarantee they will remain PRS housing at market rents for at least 12 years, after which 40% of them – 42 units – will become affordable housing, and will revert to Grainger’s social housing subsidiary Grainger Trust. The deal effectively gives Grainger a 12 year guarantee of returns at open market rents, to recover their investment.

At Wellesley, the permission for the 108 homes for rent is not tied to future conditions. The project as a whole, which includes  3,850 homes, already has a provision that 35% of the total will be affordable.

The company says its commitment to the Hampshire developments proves that purpose built PRS development can work outside city centres, in more suburban environments.