Category Archives: social housing

Notting Hill embraces private rental housing in porfolio mix

Housing associations need to embrace the private sector in order to help deliver more social housing. That’s the message from Kate Davies, chief executive of housing group Notting Hill.

While still a housing association dedicated to providing supported homes, Notting Hill has moved with the times and today almost one fifth of its portfolio is private rentals and shared ownership housing. In an interview with The Guardian, Davies says that building a more commercial attitude is essential. “I support social housing – there should be more of it. But if there is limited money available for that, what else are you going to do to produce more of it?”

Davies says that Notting Hill is still dedicated to its core activities, but that housing associations who baulk at change are living in the past. Subsidies from government are declining, and that means other options have to be explored, to help fund the provision of affordable homes. “If you can produce low-cost housing for people by doing commercial activity, do the commercial activity.”

Read more of the Kate Davies profile in the Guardian.

£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.”

 

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.

 

Peabody takes control of Thamesmead garden suburb opportunity

Private landlord Peabody has taken control of a 100 acre tract of land in Thamesmead, south east London, with the aim of planning a major settlement in the area that could support thousands of new homes.

Peabody, one of London’s largest and oldest housing providers, has taken over Tilfen Land, which owns major sites in Thamesmead, and Trust Thamesmead, a community development agency.

“Bringing Tilfen and Trust Thamesmead into Peabody will help us realise our vision of creating thousands of new homes and jobs, which will drive the comprehensive regeneration of the area,” said Peabody chief executive Stephen Howlett. “Thamesmead has the potential to be London’s major garden suburb, with beautiful green space, first-class amenities, excellent schools, and rapidly improving transport connections.”

The moves follow January’s acquisition by Peabody of Gallions Housing Association, and Peabody is now talking of a 10 to 15 year period of development for Thamesmead, which in 2018 will benefit from better rail connectivity thanks to a Crossrail link at Abbey Wood station. London mayor Boris Johnson is likely to be supportive of further development at Thamesmead, having named the location as a potential new “garden suburb” in his recent housing strategy.

Peabody has previously committed to building 1,000 new homes a year from 2015, and is comfortable building a mix of tenures, including social rent, private rented, homes for sale, and commercial space for rent.

Boris promises more homes for London – rented and affordable, too

More homes, more rental property and greater market transparency have all been promised by London mayor Boris Johnson, in a speech at the MIPIM international property conference.

Johnson said he had set a target of delivering 40,000 homes a year for next 10 years, across a mix of tenures. He cautioned against those complaining about foreigners investing in London property, as such investment shows confidence in the market and is overall beneficial.

Boris Johnson, speaking at MIPIM

Boris Johnson, speaking at MIPIM

“There will be many, many people now – and you’re seeing a growing proportion in London – who depend on the private rented sector, and we’ve got to expand that too. We’re putting huge amounts of our land in, we’ve made about £3.5bn of land available.”

Investment from institutions into the private rented sector is, he said, “at last starting to take off. But what we should on no account do, is turn up our noses at foreign investment, because very often it is that investment that allows us to deliver so many of the homes that Londoners need.”

Johnson specifically mentioned investor Qatari Diar, which has bought into the former Olympic village in Stratford; while Dutch and American pension funds are coming in to help develop private rented accommodation in Elephant & Castle.

The mayor said he expected private developers to help deliver affordable housing. In the current buoyant property market, developers should expect to deliver a useful number of affordable homes in their projects.

“It’s up to us, in government, to do everything we can to ensure that Londoners are in a position to get those homes, and that means making sure there are enough affordable homes in development. And I am proud to say over the course of this mayoralty we will have done 100,000.”

Johnson also said there was justifiable annoyance that residential developers flew to the Far East to sell their London residential developments off plan, sometimes completely ignoring the home market. He has encouraged many of them to sign up to a code of conduct that will ensure they promote projects to a UK audience of potential buyers, at the same time as they court overseas investors.

Want to watch Boris, and hear how well(?) his gags went down? Click for video.

Fizzy Living receives £200 million investment to build rental homes

Private rented sector developer Fizzy Living has received a £200 million cash investment to help speed the growth of its rental homes portfolio. The funds have come from the Abu Dhabi Investment Authority, via its investment vehicle Silver Arrow.

The injection will enable Fizzy Living, which is owned by Thames Valley Housing Association, to significantly expand its activities in the private rented sector, where it has set out firmly to provide rental homes primarily for young professionals, and initially in the greater London area.

Said John Garrity, group chair of TVHA: “As the PRS market is growing quickly with new players emerging all the time, it was a specific objective of ours for Fizzy to have access to a larger capital source within the first two years of operation. We now look forward to Fizzy proceeding rapidly towards its goal of building a large portfolio of quality private rental accommodation.”

The involvement of ADIA, which is well known for its significant investment in other areas of property, including major commercial projects, shows that the UK rented housing sector is now attracting institutional funds. The deal also suggests that ADIA has seen past the historic opinion of many institutional investors, who believed that offices, retail and warehouse properties presented better returns than housing.

Fizzy is likely to split the money between purchasing complete blocks of apartments or whole schemes from developers, and undertaking its own residential developments. Already the company has Poplar, Stepney Green, Canning Town and Epsom which it is renting out.

Fizzy Living launched in early 2012 with £30 million of funding from TVHA. It has subsequently drawn in a further £40 million from Macquarie Capital, but the involvement of ADIA will now considerably accelerate its activities.

TVHA is probably the leader among housing associations getting into the private rented sector. It has managed to finesse the relationship between a not for profit parent and its commercial arms-length subsidiary in Fizzy Living successfully, while other housing associations are still struggling to get comfortable with the concept. Garrity made the point that “profits generated from this venture are invested back into the association to meet our social purpose”.

One key to Fizzy Living’s success is the fact that it has its own, stand-alone branding, complete with an edgy design and website designed to appeal to the target market; and a strong customer service ethos to support its renters.

Geeta Nanda, CEO of TVHA, noted that ADIA’s investment reflected that differentiation in the market: This, we believe, is largely to do with the clarity of Fizzy’s focus, which delivers a great solution to the housing needs of a defined demographic.”

Peabody celebrates 150 years as a private landlord

The Peabody Estate is celebrating the 150th anniversary of the opening of its first housing development. Its first  estate block opened in Commercial Street, Spitalfields to accept its first tenants on February 29, 1864. And the new arrivals enjoyed luxuries including separate laundry rooms, and space for children to play.

Today, Peabody provides homes for 70,000 Londoners. Peabody chief executive Stephen Howell commented:

“It is 150 years ago today since the birth of social housing at scale, conceived by George Peabody to ‘ameliorate the condition of the poor and needy of the great metropolis’ of London.

“One hundred and fifty years later we have extended this enduring mission; providing a good home, a real sense of purpose and a strong feeling of belonging to over 70,000 Londoners. In the midst of austerity and an affordable housing crisis in the capital, this work has never been more important.”

Ironically, the Commercial Street building is no longer owned by Peabody, providing affordable housing. Instead it is a privately owned building, offering private rented sector flats.

Commercial Street, the first Peabody flats

Peabody was founded by an unusual character, a generous banker named George Peabody, who set out to build better housing for the poorer folk of London. Where is his modern equivalent, when the capital really needs them? More on the Peabody history here.

 

Private rented sector landlords turn away from local authority tenants

Private rented sector landlords are turning away from local authority tenants, as a result of changes to the benefits system. A benefits cap, and the so-called “bedroom tax” are forcing local authority tenants to rethink their housing priorities, with several consequences.

One of these is that tenants are moving from more expensive to cheaper areas. And councils with too much demand than can be met by housing association stock, are looking to the private sector for rented property.

The issues were debated by the London Assembly’s housing committee recently, who called local authority representatives to speak to them about the issues the changes were raising.

“I can foresee additional pressure on the private rented sector,” said councillor Jayne McCoy, chair of the housing, economy and business committee at the London borough of Sutton. “It is harder and harder to find private sector landlords who will offer temporary accommodation to a local authority, so we have seen a big gap there; and it is just going to be harder and harder.” Councilllor Dudley Mead from Croydon agreed: “It is getting increasingly difficult to persuade private landlords to give us their properties.” One solution in his borough has been for the local authority to pay landlords directly by monthly direct credit, effectively overturning recent government changes. “Our covenant to pay is copper-bottomed,” he said.

In Hackney, councillor Karen Alcock said the local authority is proactively looking to handle the letting of private rented properties directly. “We are actually going to try to take private rented sector properties away from the lettings agencies and use them ourselves with our own stock.”

In Sutton, said McCoy: “We have seen increases in rents and also a reduction in people prepared to rent their property, not the bigger ones but certainly the smaller private landlords.”

Alcock summed up the problem local authorities face, in a competitive market such as Hackney: “Why would you go to the LHA when you can get four young professionals paying £200 plus a week?”

 

Legal & General edges towards involvement in private rented sector

UK institutions need to be part of the solution in resolving the UK’s housing shortage. “The private sector has a role in finding a solution,” insists Bill Hughes, managing director of Legal & General Property, in an opinion piece published by Property Week magazine.

Hughes notes that his organisation was historically a major owner of private rented housing, but this declined over time, with the move aided by the extension of rent controls by earlier governments. However, he now sees the mood of the UK consumer changing, away from an obsession about buying a property and towards the flexibility and other attractions of renting.

Today, just 1% of the nation’s private rented sector homes are owned by institutional investors, with private amateur landlords dominating. As a result, few homes are being built that are designed from the outset to suit renters i.e. homes with the right sized rooms, in the right places, that are easy to maintain efficiently.

Government, too, now understands the importance of renting homes, he says. “A vibrant rental sector is now recognised as being a key factor in the productivity of international cities.” Build to let will be just one part of a multichannel solution to the UK’s housing problems.

Hughes says L&G is already strongly committed to encouraging more homes. It has a stake in a house builder, is investing in student accommodation, and is lending to housing associations.

“Housing designed and built for long-term private-sector renting is virtually absent in the UK, despite being a large and mature investment class in both the US and Europe,” says Hughes. Here’s hoping Legal & General will take an active role In getting that private rented sector housing built.