Manchester-based contractors McGoff & Byrne have unveiled plans to enter the private rented sector with an initial scheme worth £45m.
The company has submitted planning permission for the 383-unit project located on Woden Street in Salford, Greater Manchester.
A decision is expected in January next year and the team hopes to be starting on site by June 2015.
Speaking to Construction News, McGoff & Byrne executive director Dave McGoff said the firm’s move into PRS was an easy transition from its work in building care homes, where the firm already designs and builds the homes and then manages them with a clinical expert onsite.
It also provides support services for the buildings such as IT and administration services.
Mr McGoff said: “We’re unique in that not many firms actually bolt on the operational expertise to the business. You see many contractors that lease care homes but you don’t see many that run the operations as well.
“PRS is very similar to this. You build an asset, you manage it, and you provide services. So you’re renting on six-month basis without clinical care and creating an income stream after the build.”
The Salford project has a build and development value of £45m.
The contractor will set up a management business that will provide the services after the scheme is completed, which will be supported by the revenue from the rented flats.
This will be the firm’s first PRS scheme, but Mr McGoff said it is “going to be a big part of what we do moving forward”.
“There is definitely an appetite for funding PRS, certainly in Salford and Manchester. But I think it will be very consistent over the four Northern powerhouse cities,” he said.
The executive director said this would be the first “true” PRS scheme in the UK, with the firm taking a long-term and single landlord approach, rather than building a project and selling it on in tranches to investors.
“I think PRS is misunderstood. Most people are obtaining planning consents and then selling apartments within a block and that’s quite fragmented – there’s nothing new in that. What is new is keeping one landlord in place and the efficiencies [that brings].”
The contactor is looking at various options to help fund the scheme, including the government’s debt guarantee scheme, although this has yet to be finalised.
McGoff & Byrne is also eyeing sites in Leeds, Birmingham and Liverpool for further PRS developments.
Mr McGoff said the firm wanted to identify sites with characteristics similar to its proposed Salford development, such as good transport links and a strong location with good communal space.
The firm has targets of doubling turnover within the next two to three years, to push it above the £40m turnover threshold.
It secured its biggest contract to date in April this year, a £14.6m win from Bourne Leisure for the first phase of the redevelopment of a Butlins holiday resort at Minehead in Somerset.