The loan as part of the government’s new Home Building Fund will drive the development of over 2,000 homes in Manchester, Leeds and Birmingham.
- The government has announced that £45 million of its new £3 billion Home Building Fund will go towards kick-starting a deal involving 2,000 new build-to-rent homes
- It includes 995 new purpose-build units in Manchester, currently the city with the UK’s highest yields
- With reforms recently introduced to curb investment into the buy-to-let sector, does this cement build-to-rent as the future of rented living and property investment in Britain?
The UK government is backing the growth of the country’s build-to-rent sector.
After new tax and legislative reforms in recent Budgets and Autumn Statements were introduced to discourage investment into the outdated buy-to-let sector, the government has now announced that it will inject £45 million from its new £3 billion Home Building Fund to drive the development of a deal that includes 2,000 new build-to-rent properties.
The deal, worth £400 million in total and backed with funds from HSBC, will see the construction of 2,062 new purpose-built units for the private rented sector (PRS). 995 will be in Manchester, the UK’s number one city for yields, with 744 in Leeds and a further 323 in Birmingham.
It follows Chancellor Phillip Hammond’s Autumn Statement last month in which he announced a “step-change” in the UK’s approach to house building.
“Alongside homeownership, we’re determined to create a bigger, better private rental market to offer greater choice for tenants in a country that works for everyone,” commented Housing Minister Gavin Barwell.
“This is one of the largest private rental sector deals in the UK and will not only create thousands of homes for people in Birmingham, Leeds and Manchester – it will create jobs and opportunities for many hundreds of people.”
November’s Autumn Statement also saw letting agent fees scrapped for tenants. This also followed previous economic changes from Mr Hammond’s predecessor, George Osborne, aimed to reduce the flow of investment into the buy-to-let sector, including the end of mortgage tax relief and increases in stamp duty.
With the country’s PRS at record size and growing, the government wants to see greater levels of regulation and quality for the 5.4 million households that currently rely on rental property.
The build-to-rent sector is predicted by Knight Frank to be worth £50 billion by 2020.