Private rented sector developer Essential Living has received the first payment from the second phase of the government’s Build to Rent fund. The company will get a £52 million loan via Royal Bank of Scotland and the Homes & Communities Agency to fund projects in Maidenhead, Archway and Bethnal Green.
The three year loan will enable the developments to proceed, getting the first apartments complete for renting in early 2016.
Essential Living has set out to convert office buildings or develop new properties, designed from the outset for rental. It has already received £150 million of backing from investor M3 Capital Partners to start its development programme.
The company has received permission for the conversion of its Archway office tower to flats. But in Swiss Cottage, its bid to build a new residential tower has hit a problem, with its planning application turned down after local people objected to the bulk of the proposed development.
“This funding will help us spread our existing equity even further, enabling us to develop our pipeline of 5,000 homes for long term rent quicker,” said Essential Living’s Daryl Flay.
“There’s a genuine need for the old-style housing market to be disrupted. Renters deserve certainty, great customer service and above all, the confidence to make a place your home and trust in your landlord. We want people to feel they’re at home the minute they walk in the building and this underpins our focus on creating a new style of living with a host of amenities and shared spaces encouraging community living for today’s renters.”
And Phil Hooper of RBS commented: “We are delighted to be supporting Essential Living with these first three schemes alongside the HCA. We hope that this senior debt support will lay the foundations for delivery of a significant PRS development pipeline.”
Build to Rent was established by the government in 2012, to help accelerate private rented sector development. An initial £700 million was topped up more recently to £1.1 billion. Funds are advanced as a repayable loan, potentially easing the funding of construction in situations where development finance may be harder to find from other sources.
“We’re determined to create a bigger, better private rented sector so I’m pleased that we’re working with Essential Living to deliver newly-built homes specifically for private rent,” said housing minister Brandon Lewis.
“Thanks to a contribution from our Build to Rent fund and RBS, 300 homes will now be built across Bethnal Green, Archway and Maidenhead for new tenants. Essential Living is the latest company to move into this new and growing market for private rented homes and I hope others follow in their footsteps.”