Posted 05.10.15
Home Group has launched its 'Flexible Rent' white paper which details how housing providers could work with institutional investors to build homes for market, mid-market and affordable rent without any Government grant.
The paper, which has been produced following months of research with the New Economics Foundation, details how construction of new homes at scale is possible in London and the South East despite the twin challenges of zero grant and affordability pressures.
Mark Henderson, Home Group Chief Executive, said:
"We worked closely with the New Economics Foundation and our financial modelling shows that Flexi Rent would work in the London Boroughs outside of zones 1 and 2.
"Historically housing associations have focused on providing homes for low earners who would otherwise struggle to afford a decent home. What we are clearly seeing now is the growing problem of 'Generation Rent' - 20 and 30 somethings who enjoy reasonable earnings but have been locked out of home ownership due to sky rocketing prices.
"Flexi rent would allow us to build homes for those who are able to pay 100% market rent and also cross subsidise rents to levels as low as 65%."
Large institutional investment companies have tended to stay clear of the UK private rental sector due to perceived high levels of risk in rents. Flexi Rent addresses these issues by providing investors with a defined income across the whole of a development rather than individual properties.
The flexibility to issue new tenancies on large scale schemes, of typically 300 units, allows housing providers to fine tune the number of full market rents and guarantee a return to an investor even against a fall in rent levels of as much as 20%.
