Private Rented Sector Berkeley Deal

6 Sep 2010

Policy area: Residential

BPF hails landmark deal to deliver 555 new rented homes

The BPF has welcomed today’s landmark deal between a housebuilder and the Homes and Communities Agency (HCA) that will create 555 new homes for rent by June 2012.

The Berkeley Group is the first housebuilder to commit to the HCA’s private rented sector initiative, which gives it access to essential funding from the agency.

In the deal, Berkeley will receive £45.6m of HCA funding – including £29m from the agency’s Kickstart programme – allowing it to build 1,778 new homes in the south of England. Under the deal, a Private Rental Fund will be established, which will purchase 555 of the homes, and these will be retained for rent on the open market.

In return for the funding, the HCA will have a 20% interest in the value of the Private Rental Fund.

The BPF has long campaigned for the Government to encourage institutions and property companies to invest in the private rented sector. Although the HCA had established its initiative, it needed someone to venture out and take advantage of the funding available. Berkeley Group has now done this.

Liz Peace, Chief Executive, British Property Federation, said:

“This is excellent news and something upon which the BPF has campaigned for a long time. The HCA and Berkeley deserve huge credit for finalising this deal, which will deliver new homes in areas of high demand in difficult times.

“This shows that the financial numbers can be made to work and that large-scale market renting can support wider housing delivery. The approach should be considered by local authorities, alongside similar innovative approaches such as that used in Birmingham, as potential housing delivery models to explore.

“The private rented sector has an important role to play in meeting the nation’s housing needs. While mortgage lending remains restricted, more people are choosing to rent, and large housebuilders and institutional investors should be encouraged to meet this demand with quality homes to rent.”