The first 45 Build to Rent projects have been announced with c.£700m of Government funding allocated. We give a short overview of the Build to Rent scheme.
What is it?
The government is providing funding (through loans and equity investments) for “viable” development schemes. The properties must be residential and must (usually) be used for rental at least until the funding is repaid.
How much money is available?
Originally £200m…now £1bn.
A nation of shopkeepers is fast becoming a nation of renters. There is a lack of quality stock and rents are outstripping wages.
Build to rent looks to underpin an increase in the number and quality of properties in the private rented sector.
The scheme should also help the construction industry that has been “depressed” (probably the most polite way to put it) since about 2008. The latest figures show a decrease of 7% in February 2013 compared to February 2012.
It is envisaged that the built out schemes will be sold to institutional investors searching for yields.
The Prudential’s recent move back into the private rented sector is encouraging in this regard.
What we think
Built to rent is a proactive and innovative step.
The overall approach is commendable as it combines Government capital (rather than current) spending, targeted benefits for the private sector to achieve a societal need and a boost to a critical industry.