Calls grow for councils to consider large-scale market renting

Calls have been made for local authorities to use large-scale market renting to support wider housing delivery after a landmark deal was struck between the Homes and Communities Agency and construction business The Berkeley Group to establish a private rental fund.

Under the deal, some 555 new homes will be constructed by The Berkeley Group over the next two years. These will be purchased by the fund, a wholly owned subsidiary of the group which will retain the properties for rent on the open market.

The HCA is to provide £29m in Kickstart funding in return for a 20% interest in the value of the fund as well as support affordable housing through its National Affordable Housing Programme.

The Berkeley Group said the HCA’s combined investment of £45.6m would allow it to bring forward further phases on ten of its developments, which would deliver a further 922 homes for private sale along with 299 affordable homes. These properties would be in addition to those retained in the fund.

The developments are located across London, the South East and the South West.

HCA chief executive Sir Bob Kerslake, who has just been appointed permanent secretary at the Department for Communities and Local Government, said: "This is exactly the kind of landmark deal we were looking to have associated with our private rental sector initiative. We know that more people are choosing to rent and as well as accelerating the supply of new open market and affordable homes, the creation of a bulk portfolio of homes for rent could be a blueprint for long-term investment in the private rental sector in the future."

Rob Perrins, managing director of the Berkeley Group, said the creation of the private rental fund with the support of the HCA was a significant innovation for the private rented sector and would provide high quality homes for open market rent across a number of sustainable communities.

He added: “Our commitment to this initiative is made possible through our strong financial position which enables us to retain this volume of properties through the fund and maintain an ongoing financial stake in the sustainable communities we are creating."

The British Property Federation described the deal as “excellent news”, saying the private rented sector had an important role to play in meeting the nation’s housing needs.

Chief executive Liz Peace said: ““The HCA and Berkeley deserve huge credit for finalising this deal, which will deliver new homes in areas of high demand in difficult times.

“This shows that the financial numbers can be made to work and that large-scale market renting can support wider housing delivery. The approach should be considered by local authorities, alongside similar innovative approaches such as that used in Birmingham, as potential housing delivery models to explore.”