An innovative approach to addressing the housing crisis. A new model for affordable housing

Transcription

1 An innovative approach to addressing the housing crisis A new model for affordable housing April 2015

2 Why do we need a new affordable housing model?

3 Housing sector background Nationally and locally, demand for housing far exceeds supply Grant funding to Registered Providers (RPs) through the Homes and Communities Agency has significantly declined Changing profile of HCA Investment Partners and risk appetite Need for a fresh approach to reinvigorate delivery and open up real choices for local people

4 The housing crisis

5 The housing crisis (1) In excess of 200,000 homes needed each year Only 100,000 to 118,000 built each year over the past five years Housing benefit bill 25bn Constraints include: Fear of rising interest rates, MMR and mortgage regulation Affordability remains stretched Land supply and planning Rising build cost inflation, supply chain shortages, availability of labour and materials

6 The housing crisis (2) 80% of people in England think it is harder to own a home now than it was for their parents generation (NHF) Average house prices continue to rise: in South west now 200k - up 4.5% in the year to Q (Halifax) Based on household projection numbers and recent housing supply rates, the NHF estimates that by 2031 England will face a shortfall of 2.5 million homes 52% of first time buyers in 2014 were assisted by friends and family (CML). Low interest rates on savings extends length of time required to build a deposit from taxed income Median first time buyer deposit outside London in 2014 was 25k 34k in 09/10 peak (CML). Government considers this is still too high

7 Affordability in % house price growth forecast over next five years across the South West - significantly ahead of wage growth PRS sector set to exceed social housing across England and Wales by 2019: PRS 6.04m : Social renters 4.04m Owner-occupation reducing to 14.67m and age of first-time buyers increasing: Under 35s will reduce from 28% to 16% year-olds will see private renting increase by 31% (Savills)

8 Tenure of choice If you were told that you had to rent rather than buy a house or flat for the rest of your life, how would this make you feel? Unhappy 61% Neither 19% Happy 13% -Source: ComRes for BBC June 2013 Poor people in rented accommodation are more likely than poor home-owners to be dissatisfied with their neighbourhoods and to experience social exclusion on all dimensions considered by the survey: they smoke more, report that their general health is not good, lack adequate social support, and vote less. (Joseph Rowntree Foundation)

9 What is Rentplus?

10 What is Rentplus? (1) Developed in the South West by Richard Pillar and Tamar Housing Both based in Plymouth with the support of the City Council No capital grant sought and attracting substantial pension scheme and ethical institutional investment New homes managed and maintained by an approved local RP Highly regarded board and strong governance

11 What is Rentplus? (2) Ambitious business plan approved to deliver 5,000 completed homes as part of an 8,000 home pipeline nationally Delivers new affordable homes for rent for up to 20 years A new option to complement existing models of affordable housing to promote mixed tenure, at scale and improve choice Provides real opportunity to people in housing need who aspire to home ownership and are unable to save a deposit from taxed income, for example: those in (i) existing social housing unsuitable for their needs or (ii) private rented accommodation

12 How does Rentplus work?

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14 How does Rentplus work? (1) Partnerships with local authorities, house builders, land promoters, HCA and Rentplus to identify suitable sites for Rentplus homes Rentplus homes are included as a new option to improve the mix of tenures as part of Section 106 requirements Rentplus homes can increase the % of affordable homes on new developments Rentplus villages provide early delivery of flexible tenure affordable housing, at volume, creating sustainable communities

15 How does Rentplus work? (2) Homes built to HCA, building regulations and local authority agreed space standards Rentplus homes are leased to local partner RPs for up to 20 years Homes are made available at affordable rents to those in housing need through LA waiting list, Home Choice and/or Help to Buy Agent Rentplus homes are available for a period of between 5 and 20 years, on 5 year renewable tenancies

16 How does Rentplus work? (3) Tenants are supported and enabled to move to home ownership by our partner local RP Through a phased approach, beginning after five years, a proportion of Rentplus homes are released for purchase by tenants A gifted deposit is provided upon purchase As homes are sold, Rentplus intends to replace them to maintain the number of affordable homes for rent

17 Ethical investment Pension funds and ethical investors are keen to invest in the affordable housing sector Rentplus offers the mixture of rental income and capital return necessary for a viable investment product The Rentplus model can be grown steadily, and through further investment of capital, create a virtuous circle of investment in the local authority area Local authority and Rentplus can agree a Memorandum of Understanding setting out the principles and expectations

18 Rentplus for the community Rentplus homes will: be designed with and for the local community be built to high quality standards promote community safety help tackle fuel poverty provide resident choice be attractive for ownership provide an opportunity to rent, save and own be made available to those in housing need and priority groups such as those in training, working families on lower income and armed service personnel

19 Rentplus for registered providers Rentplus homes will be leased to an approved local partner RP selected by Rentplus for their excellent customer and landlord services: To support organic growth for the smaller RP To significantly increase income without additional borrowing To increase the range of housing offer and expertise

20 Rentplus for registered providers Rentplus encourages strategic development partnerships with larger RPs to support delivery of more affordable homes and a wider range of tenure products: To improve sustainability To support a step-change in delivery and volume To improve viability and secure new opportunities To promote inward investment to the local economy To create employment and training opportunities To create greater choice for tenants

21 Opportunity for tenants A new home at an affordable rent with support and guidance from the partner local RP to achieve home ownership An opportunity to demonstrate creditworthiness through a five-year tenancy of rent payments to help mortgage application A gifted deposit at the time of purchase combined with savings made on discounted rent A home which is planned and integrated as part of open market housing and designed with the future in mind

22 Benefits for local authorities A significant increase in the number of homes available at affordable rents and New Homes Bonus payments Promotes mixed tenure developments and step change to delivery Can add value to council-owned land and may attract a capital receipt for the local authority Each home built creates 1.8 jobs directly or in the wider economy Every new home built in the South West adds 77k to the regional economy

23 Working with Plymouth City Council Plymouth City Council Plan for Homes: 5,000 new energy efficient homes over 5 years to support the population and meet the housing needs of the City: Stimulate growth and inward investment- 45.3m into the local economy Create 2,000 new jobs, training and apprenticeships Rentplus and Section 106 Agreements Memorandum of Understanding Working together to meet the Plan for Homes Minimum of 500 new homes within 5 years

24 Working with Sedgemoor District Council Core strategy identifies demand for nearly 500 homes pa: Strong focus on delivery in Bridgwater Despite rapid growth of PRS, displacement of existing households on lower incomes through arrival of skilled workers for Hinckley C Sustain growth of commercial sector Require rapid supply of new forms of affordable housing Rentplus and Section 106 Agreements Memorandum of Understanding Working together to identify sites and S106 opportunities Minimum of 400 new homes within five years

25 An innovative approach to addressing the housing crisis Thank you for listening Any questions? Richard Connolly Rentplus Mobile: