Council, pension fund and HCA hail pioneering housing investment model

A city council, a public sector pension fund and the Homes and Communities Agency have agreed a new housing investment model that is thought to be the first of its kind in the country.

The memorandum of understanding signed by Manchester City Council, the Greater Manchester Pension Fund and the HCA, is expected to lead initially to more than 240 new homes being built across five sites in the city.

The local authority will supply development land, while the pension fund will finance the building of the homes. The HCA will meanwhile offer one of the five sites.

The three bodies will select a contractor to design and build the homes and a property manager to run the rented properties.

Manchester City Council will take an equity share in the property in a bid to make the homes more affordable and to lower mortgage costs.

The three organisations believe that the deal could mean buyers getting a home for 20% lower than the market level.

The arrangement is also expected to generate a revenue return from the investment through rents and a capital return through sales of houses.

“If successful the housing investment fund scheme could set a precedent for much bigger projects with other major investors – securing a bright and sustainable future for the Manchester housing market,” the local authority said.

Cllr Jim Battle, Deputy Leader of Manchester City Council, said: "Manchester’s growing population and forecasted economic growth will mean we will continue to need more homes in the near future. The economic climate has severely slowed home building in recent years and levels of development are not keeping up with the city’s demand.

“This new innovative model tackles these issues, pushing forward development opportunities while ensuring a supply of new attractive homes are available to residents at affordable prices.”