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Andrew Stanford BSc (Hons) MRICS FIRPM Head of PRS Taskforce ACES Annual Conference

Kick-starting a New Private Rented Sector. Andrew Stanford BSc (Hons) MRICS FIRPM Head of PRS Taskforce ACES Annual Conference 19 th September 2013. Overview. The PRS Today. Institutional Demand. PRS Government Initiatives. PRS Taskforce – Objectives. PRS and Local Government.

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Andrew Stanford BSc (Hons) MRICS FIRPM Head of PRS Taskforce ACES Annual Conference

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  1. Kick-starting a New Private Rented Sector Andrew Stanford BSc (Hons) MRICS FIRPM Head of PRS Taskforce ACES Annual Conference 19th September 2013

  2. Overview • The PRS Today. • Institutional Demand. • PRS Government Initiatives. • PRS Taskforce – Objectives. • PRS and Local Government. • Next steps

  3. England - Structural change in demand Long term mean proportion of PRS dwelling stock. The current PRS trend – a long term reversion to mean. Sources: Savills, CLG, Survey of English Housing 3

  4. The PRS Today – Dominated by Smaller Landlords

  5. The PRS Today – Cottage Industry

  6. Institutional Demand Increasing Why? Good long term prospects. Good liability matching credentials. Low volatility. A good diversifier. Government support. Stable regulatory environment. “We are at a tipping point [in the PRS]. The journey from niche to mainstream is just beginning.” Martin Moore, Chairman PRUPIM – 16th April 2013 “It depends on the planning environment…but…it’s our…intention to have a much bigger role in the private rented accommodation market” Nigel Wilson – Chief Executive – Legal and General – 14th August 2013 6

  7. The new PRS – What will it look like? 7

  8. Private Rented Sector TaskforceKick-starting the New Private Rented Sector KEY STRATEGIC OBJECTIVES BUILD PARTNERSHIPS HELP SHAPE GOVERNMENT POLICY Increase institutional & private sector investment Increase supply of large scale new build PRS housing Raise standards & encourage innovation DEMAND STANDARDS LEGACY SUPPLY Leave a lasting legacy 8

  9. Private Sector - Some Investors in New PRS

  10. Registered Providers - Some Investors in the New PRS

  11. Private Rented Sector TaskforceKick-starting the New Private Rented Sector KEY STRATEGIC OBJECTIVES BUILD PARTNERSHIPS HELP SHAPE GOVERNMENT POLICY Increase institutional & private sector investment Increase supply of large scale new build PRS housing Raise standards & encourage innovation DEMAND STANDARDS LEGACY SUPPLY Leave a lasting legacy 11

  12. Government PRS InitiativesSubstantial Market Stimuli Up to £1bn in low cost finance. Housebuilders, developers, Housing Associations, JVs involving Local Authorities etc. Large-scale, professionally managed, good quality rental homes 41 Round 1 bids being taken forward to deliver up to 10k new homes. First deal signed. Centenary Quay, Southampton. £3.5million loan. 102 PRS homes. More deals imminent. One quarter in London. Remainder across South East and England. Round 2 launched 12th September 2013. Deadline - 31st October 2013. £3.5bn of direct debt guarantees will be available. An additional £3bn held in reserve. Will support “low cost” investment loans on large-scale new build PRS housing schemes. Min project size £10m (can be several sites) Maximum loan/equity: 80:20 Maximum rent/interest cover net – 1.2:1 Open for dialogue. Build to Rent Fund – England Only PRS Debt Guarantee Scheme – UK wide PRS Taskforce 12

  13. Local Government and the PRS • How can PRS help Local Authorities to achieve objectives? • Meet local rented housing demand. • Increasing housing supply. • Creating sustainable communities owned by long term investors. • Bring forward stalled sites. • Bring forward phasing on large sites. • New Homes Bonus. • Stimulate growth, employment and labour mobility. • Drive out rogue landlords.

  14. Local Authority Pension Funds and the PRS • LAPF’s should consider investing in PRS stock. • Reap benefits of LA long-term strategic vision. • Manchester City Council and GM Property Venture Fund. • Trailblazing and innovative. • Expect to see more schemes.

  15. Next Steps • To help achieve their objectives LA’s should:- • Recognise PRS role when assessing housing need. • Use NPPF flexibilities. • Promote PRS via section 106 or covenants on LA owned land. • Consider deferred commuted sums if PRS schemes later revert to “for sale” • Recognise economics of new PRS schemes in viability assessments.

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