A new £200 million fund to boost the development of new homes specifically for private rent has been welcomed by landlords.
The fund willl invest equity or loan finance in a range of projects in England where there is demand for new private rented housing.
It will focus on large scale developments with the aim of injecting funds to stimulate other investors into the projects. It is hoped it will encourage pension fund and other institutional investment in new-build market rented housing.
The fund could be used to cover development costs such as land, construction or management costs. Once the development is complete and fully let, the developer will refinance or sell on its interest and repay the finance back to government.
It also marks a further step in implementation of the Montague Review of Housing Investment, conducted by Sir Adrian Montague during the summer of 2012.
Liz Peace, chief executive of the British Property Federation said: “Part of the challenge of attracting institutional investment into market renting is finding suitable stock to invest in.
“The existence of this fund, and the speed at which it has been put in place, is important and very welcome in illustrating government support for build-to-rent.
“The choice of specific projects, however, will determine its success and the aim should be to find projects that exemplify build-to-rent and that will act as an excellent catalyst to the wider market.
Ms Peace added the launch is just one milestone in the implementation of Sir Adrian’s work to create a sustainable investment sector
She added: “If it is to be money well spent then Government must also follow through with the other Review recommendations, particularly on clarifying how the planning system treats build-to-rent.”
Pat Ritchie, chief executive of the Homes and Communities Agency, said: “This programme will increase and accelerate the building of quality and well-managed private rented homes, as well as encouraging long-term institutional investors to the sector which will in turn unlock greater capacity in the housing market.”