Thousands of new rent-to-buy homes to come thanks to new funding
Affordable homes provider Rentplus has secured up to £70m of funding to help it deliver 580 homes from its target of building 5,000 new affordable homes by 2020.
The Plymouth-based company has secure the finance from two pension funds and will produce the new homes through its business model of working closely with local authorities and national, regional and local housebuilders, developers and housing associations.
The company has already agreed to deliver 500 homes in partnership with Plymouth City Council and residents have already moved into some of the first Rentplus homes at developments in Plymouth and West Dorset.
Rent-to-buy offers tenants a subsidised rent of 80% of market rate, with the option to purchase the home after five, ten, 15 and 20 years of the agreement, with Rentplus gifting a 10% deposit on the purchase. The company then replaces all purchased homes with more rental property.
John Gildersleeve, chairman of Rentplus, says: “As is widely recognised, the current affordable residential property market model in this country is not working. Homeownership is overwhelmingly the first choice across the UK, however 48% of households in the 25-34 age group currently live in the private rented sector compared to 21% in 2003-04. The primary reason is lack of affordability, the driver of which is lack of affordable housing supply.
“We must therefore fix the model and innovative solutions such as Rentplus’s intermediate rent-to-buy are absolutely crucial in a climate where rents are increasing and deposits required to buy continue to climb – reports earlier this year put the average deposit to buy a home at more than £80,000. Our rent-to-buy model is designed to solve both of these issues.
“We are delighted to receive this first, significant and innovative tranche of investment from BAE Pension Fund. It has been a pleasure to work with BAE Pension Fund who used their intimate knowledge of the affordable housing sector to understand our unique offering and has worked with us over the past 18 months during a period of significant market changes in the Registered Provider market to successfully create an innovative funding structure for us.”
Rentplus’s first development of rent-to-buy homes, at Palmerston Heights in Plymouth, was recently visited by Brandon Lewis MP, minister of state for housing and planning at the Department for Communities and Local Government. The development is a partnership between Rentplus, Tamar Housing and Persimmon Homes.