HCA CEO Andy Rose presentation at the recent BPF conference, looking at building for the private rental sector.

1. Successful places
with homes and jobs
A NATIONAL
AGENCY
WORKING
LOCALLY
Delivering Build to Let
Andy Rose
Chief Executive
Homes and Communities Agency
10 February 2015

2. The HCA – focused on delivery
 The Homes and Communities
Agency is the national housing,
regeneration and social housing
regulation agency for England.
 Our vision is for successful places
with homes, jobs and economic
growth
 Core activities:
– Housing
– Land
– Investment
– Regulation
– Local Growth and Regeneration
Aligned
public
funding and
delivery of
local
priorities
Land
Local
Growth
Affordable
housing
Recoverable
Investment
(debt/equity)
Regulation
Homes, Jobs, Growth, Communities

3. HCA-Investments (HCA-I)
 Ensuring that we have the right skills in place to deliver Government
interventions – led to creation of HCA-I
 Based on bringing commercial skills into the public sector (similar to
Infrastructure UK and Green Investment Bank)
 Market interventions to lever in private finance and investment
 Result – a dedicated unit with staff from the banking sector, the property,
surveying and planning professions alongside programme and project
managers - combining financial disciplines with social outcomes.

4. PRS – recent history
 Montague Report 2012 - measures aimed at boosting professional
investment in good quality, privately rented homes and to help meet the
nation’s housing demand
 Identified “real potential” for investment in large-scale development of
homes built specifically for private rent by professional organisations
 Series of recommendations to speed up the timescale for building the
private-rented homes needed to meet existing and growing demand
 Taskforce set up to encourage and support build-to-let investment from
the private sector
 Targeted interventions to encourage the development of Build-to-Let
business models

5. Progress to date
 Programme to deliver up to 10,000 new PRS homes and to
demonstrate that there is an appetite to deliver rental properties on a
large scale
 Government investment of £1 billion in a Build to Rent Fund, which
will provide development finance for purpose-built private rented
housing.
 A £10 billion debt guarantee scheme to support the provision of
these new homes; and up to 30,000 additional affordable homes.
 Independent private sector delivery and growing confidence in the
PRS market

6. Build to Rent Fund
 Government provides development finance to help schemes to
build, manage and let properties
 Objective is to invest in viable projects which will create a step-
change in the supply of homes for private rent
 Investment could be used to cover costs such as land, construction
or management costs. Post stabilisation period, the developer will
sell on their interest or re-finance and repay the investment
 Established as a £200 million pilot fund, which was increased to
£1bn in the 2013 Budget announcement

7. Market appetite
 Strong demand for the fund - propositions taken forward through
Round 1 and Round 2 are now being contracted
 Around £4 billion worth of bids received in response to both
competition rounds – mix of ‘delivery ready’ and medium term
propositions
 Scale and nature of the bids received reflected the developing
interest and maturity of the PRS market
 Government funding replaced with private sector solutions in some
cases – a “success”
 Increasing evidence of development of PRS market through:
– Levels of institutional investment
– Greater availability of private sector debt funding
– Creation of more dedicated PRS vehicles

8. Messages to the market
 Build to Rent Fund continuing to support creation of the PRS market
– Continuous market engagement
– Priority will be given to propositions that offer the most attractive
prospects for institutional investment going forward. The best bids will
be successful in securing remaining funding
 Continuing support from the PRS Taskforce until March 2015
 PRS Housing Guarantees available to assist with long term holding
investment in properties once construction is completed