Prisk invites bids for second round of Build to Rent fund

Prisk announced the opening for bids at residential trade industry conference RESI 2013 yesterday. He said in a statement that the Government wants to offer "more choice and flexibility" to private sector tenants and that the best bids for the fund should support longer-term tenancies as part of the mix of accommodation being provided under the scheme.

The Government set up the Build to Rent fund, which is administered by the Homes and Communities Agency (HCA), last year to cut risk for developers looking to invest in homes built specifically for private rent.

The scheme gives management companies the chance to invest in new rental developments and developers can then repay the Government investment. Chancellor George Osborne increased the fund from £200m to £1bn in the 2013 Budget.

The first Build to Rent contract was signed in July this year to fund the development of 230 homes, of which 102 will be for private rent, as part of Southampton's £500 million Centenary Quay regeneration project.

"The housing market is turning the corner, with starts up a third compared to last year, and over 25,000 households helped into home ownership since 2010," said Prisk. "But I want to go further, which is why I’m inviting bids for a share of up to half a billion pounds to help build a bigger, better private rented sector."

"This funding, combined with up to £10 billion in our housing guarantees schemes, will help build on successes like Centenary Quay in Southampton to offer greater choice and quality for tenants across the country," he added.

"With around a quarter of Londoners living in private rented accommodation, demand in this sector has the potential to support the construction of tens of thousands of the new homes the capital desperately needs," said Mayor of London Boris Johnson.

"By releasing land and working with institutional investors we are working hard to accelerate delivery in the purpose built private rented sector. I welcome this fund which will not only provide more homes for working Londoners, but also deliver much needed construction jobs and will underpin this city’s future economic growth," he added.

Iain Gilbey, planning law expert at Pinsent Masons, the law firm behind Out-Law.com welcomed the announcement but warned that there are still a number of challenges to be addressed before a step change in delivery will be seen.

"RESI 2013 has focussed on the challenges around funding the private rented sector (PRS) and the creation of a unified asset class. Absent guidance or changes to the Use Classes Order, it will be down to individual developers, local authorities and schemes to shape PRS as a sector in the UK. Inevitably that will require intervention by the Government's PRS Taskforce, particularly where planning hurdles, including viability and affordable housing considerations, need to be overcome," Gilbey said.

Expressions of interest and investment proposals can be submitted until 31 October. Bids will then be shortlisted by the Department for Communities and Local Government, the HCA and the Greater London Authority.