Notting Hill Housing Group (NHHG) has joined the Greater London Authority (GLA) and the Homes and Communities Agency (HCA) in an innovative deal to create a £90m private rented sector portfolio.
NHHG will receive a £45m loan from the Get Britain Building programme to acquire 140 new private rented units to be built by Berkeley Homes across seven London sites. NHHG will also add £45m, or another 140 homes, of its own private-rented stock into the portfolio.
The homes will be held as a private rented portfolio, bringing NHHG a rental as well as growth return – which can be reinvested into their core social housing business.
Kate Davies, Chief Executive at Notting Hill Housing Trust, said: "The opportunity to acquire such a large number of quality homes, with support from the GLA and HCA, enables us to create a strong market rent operation at Notting Hill. Our experienced team should make good returns on this stock, enabling us to also increase the number of affordable homes we can deliver.”
The GLA and HCA will exit the deal in March 2018, when the loan is due to be repaid.
The HCA administer the Get Britain Building programme in London in partnership with the GLA. Deputy Mayor for Land and Housing, Richard Blakeway, said: “This is exactly the type of scheme we want to see more of in the capital. The Mayor is working to bring increased amounts of public land forward for development and using the private rented sector to accelerate supply is a bold way to help Londoners looking for a home and boost the economy.”
Richard Hill, Programmes Director at the HCA, added: “Following the overwhelming response to the £1bn Build to Rent fund and the recent ground-breaking deal with PRUPIM, this latest deal with Berkeley shows the increasing interest in investing in the private rented sector.
“Through close working with the GLA I am delighted that we are able to support Notting Hill Housing Group in this innovative deal, which will help bring about the construction of more homes and create more jobs.”
Berkeley will complete the units by 31 March 2015, and the funding will also help support the building of 1,129 additional market homes across these and other Berkeley sites.
The units within the portfolio will be built at the following sites:
Kew Bridge West, Hounslow
Marine Wharf, Lewisham
Beaufort Park, Barnet
Woodberry Down, Hackney
Stanmore, Harrow
Saffron, Croydon
Caspian, Tower Hamlets
The Build to Rent fund is a fully recoverable, commercial investment where Government will share risk or bridge finance to allow schemes to be built, managed and let. The investment could cover land, construction or management costs.
The fund, which was initially set at £200m, was increased to £1bn in the Budget. The first 45 projects, a quarter of which are in London, were revealed last week by Housing Minister Mark Prisk.
PRUPIM, the real estate fund management arm of M&G Investments, acquired a portfolio of private rented units from Berkeley, partially funded by the HCA, last month.
The Get Britain Building programme is a £570m fund to unlock or accelerate construction at locally-backed sites with planning permission.