A Google search for the phrase "UK housing crisis" as we went to press produced over three million hits. The RICS has said that home ownership is increasingly unaffordable for many, following years of price growth, and that 1.8 million more households will be looking to rent by 2025.
To meet this demand, increasing numbers of property developers are entering the residential build-to-rent arena (also known as the private rented sector or PRS) and the government is keen to encourage investment.
Government initiatives to boost housebuilding
At the October 2016 Conservative party conference, the chancellor and the business secretary announced a £3bn Home Building Fund providing loan finance to build homes for sale or rent, as well as other initiatives to accelerate delivery of new homes on public land.
An existing scheme – not to be overlooked
As well as the Home Building Fund and other initiatives announced recently, there is an existing scheme announced as long ago as 2012 where funding is still available. This is known as the Private Rented Sector Housing Guarantee Scheme.
With housing needs still high on the agenda in 2016, there is still time to apply for loan finance from this £3.5bn fund. Its aim is to stimulate institutional investment and improve standards, with a focus on increasing the supply of purpose built, professionally managed PRS homes.
This scheme will lend money for the purchase of housing units after they have been built. It is not intended to provide development finance (that is covered by the Home Building Fund – see above). Borrowers may obtain a letter of comfort that the project qualifies for guarantee support to help them access development finance elsewhere.
The scheme is available for new-build private rented homes, with a minimum project size of £10m but no maximum debt limit. Maximum loan to equity ratio is 80/20 and the maximum loan period is 30 years.
Applications are processed once detailed planning has been obtained. Guidance notes on the Department for Communities' website state that the deadline for applications is 31 December 2016, but the Department has confirmed to us in writing that this has been extended to December 2017.
Venn Partners is the delivery partner for the scheme. Further information and an application pack are available by contacting firstname.lastname@example.org and details are available on their website.
So will schemes like this make a difference?
The government certainly hopes so. Lack of housing in parts of the UK is a long-term problem, arguably caused by decades of underinvestment. We have simply been building too few homes for too many years.
While there is still much to be done in the next decade to tackle the housing crisis, taking steps to increase build-to-rent accommodation must surely play an important role in addressing the country's housing shortage.