PlaceEXPO: Low Carbon UK: David Smith-Milne, Placefirst


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David Smith-Milne, managing director, Placefirst

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PlaceEXPO: Low Carbon UK: David Smith-Milne, Placefirst

  1. 1. Placefirst | PRS fair value family homes for rent David Smith-Milne July2014
  2. 2. • Immediate plan is to build, own and operate a portfolio of 1,000 PRS units across the North of England. • Focus is on customers that find themselves in a growing gap between social or affordable housing and home ownership. • These are low income, working households • We work in areas where low to middle income families, who are not benefit dependent, face few choices other than “amateur landlords”. • Not “affordable” housing, but it is high quality, well designed and energy efficient housing that is accessible to people on low incomes – we call this “fair value housing”. 0ur strategic plan
  3. 3. • Closely tracking business models from around the World, including USA: • Invitation (PE Backed) • Waypoint (PE Backed) • …private equity backed acquirers of distressed and / or foreclosed housing to create large portfolios of “institutionally managed” single family rental homes for rent. • 2 years of planning and site acquisition and perfecting the implementation model across a “buy, fix and manage” business cycle. • Currently on site with schemes valued at £25m of GDV. Targeting another £25m in next 12 months. • Business plan targeting £100m of assets. our strategic plan
  4. 4. placefirst development portfolio Active project Pipeline project Chatsworth Gardens, Morecambe • 91 units Woodnook, Accrington • 150+ units Walton, Colne • 27 units Vine House, Seaforth • 36 units Carr Street, Hartlepool • circa 100+ units Compstall • 121 units Centenary House, North Lancs • 15 units
  5. 5. why this market? • Nationally the PRS serves 4 markets: • those that cannot become homeowners because of their current life-cycle stage e.g. young with insufficient savings, students – generally mobile • those temporarily leaving owner occupation, because of say a job move or a divorce • those that cannot afford owner occupation because of a sharp surges in house prices, as occurred in the last housing market boom, or because of increases in deposit requirements, as has occurred since the 2007/8 credit crunch • those who cannot ever expect to be able to afford to become homeowners due to the level and/or variability of income
  6. 6. why this market? • Competition can be beaten: • “mum and dad” investors and small portfolio builders; or • Registered Providers / Housing Associations • Both highly variable in terms of quality and neither operate with any brand. • Some RPs tend not to act strategically, follow a “bid and deliver” regime, deliver variable quality housing and are failing to rise to the challenges set by Government. Output is inconsistent and highly tied to political imperatives. • Relatively easy to build a product that competes strongly in these sectors in terms of property, services, quality and security of tenure. • Can produce attractive yields, contingent upon the land acquisition model.
  7. 7. • Customers are “low income, working households”. • They are not housing benefit claimants • They are generally quite young: 50% of this cohort nationally is under the age of 40 (just 10% HB claimants under 25) • They do not form part of your traditional “low income stereotype”: just 5% are lone parents (32% HB claimants) • They are well educated: 43% have degrees (47% HB claimants have no qualifications) • These are people in work, with aspiration, well read and educated. • They aspire for quality. target demographic
  8. 8. • Our customer is a household with gross income between £25,000 and £40,000 • That household can support rent of between • £482 PCM and • £879 PCM • …depending on %age of net income allocated to housing costs (e.g. 35%) • These rental ranges allow us to spend between: • £87k and • £132k • …on “all in” development costs to create an asset yielding 6% financial model
  9. 9. • Branded housing for low income working families: • Thoughtfully designed • Aspirational • Responsible landlord • Excellent management & services • Energy efficient • Built at scale, enhances communities • Rent that represents excellent value 0ur product
  10. 10. private renting just got a whole lot better…
  11. 11. our affordable homes don’t look like affordable homes
  12. 12. make your next rented house a home…
  13. 13. features &measures • Well insulated building envelope: ground floor, external & party walls, roof • U-values between 0.15 – 0.3 • LED lighting to kitchens and bathrooms • A** rated gas combination boiler • Refurbished homes at Woodnook will be 50-60% cheaper to run • EPC Energy Efficiency Rating – from 21 to 78 • EPC CO2 Rating – from 21 to 81 • BREEAM Domestic Refurbishment Very Good • As a builder and operator of rented homes, this offers significant benefits to both landlord & tenant
  14. 14. • we never set out to deliver low carbon development • we have sought to set a new standard in this sector (design, liveability, cost to end user) • we know properties that are Built to Rent needed a different approach to Build To Sell • keep utility bills as low as possible for our customers • future proof homes against rising utility costs • create a distinctive offer to attract families to Woodnook • in challenging projects it is easy to default back to doing the minimum required • sticking to your principles requires innovation in how you do things, strong partnerships that encourage challenge and a managed approach to risk final thoughts
  15. 15. placefirst