This scheme, announced by the Government back in 2012 aims to accelerate the growth of investment in the private rent sector by institutional investors. The government have developed a guaranteed bond programme that will finance eligible PRS operators via long-term loans to support the development of professionally managed private rent sector homes, offering tenants greater choice and improving housing standards.

PRS Operations Ltd, a subsidiary of Venn Partners LLP have been appointed by the government to establish and manage the loans, including underwriting the loans an developing and maintaining a new government bond programme to fund the lending.

There will be £3.5 million of finance made available with a maximum loan to equity ratio of 80/20 with a minimum projected rent/interest cover of net 1:2:1 with all projections supported by approved professional property advice.

The eligibility criteria are as follows:

• Borrowers must be classified to the private rent sector, or a Private Registered Provider according to the definition within the Housing and Regeneration Act 2008 S. 80(3)

• The project must deliver additional new build private rent homes

• Units must be used for private rent for the period of the debt guarantee

• Guaranteed debt only available from either practical completion or purchase of the completed units – although a letter of comfort confirming that the project qualifies for support will be issued

• The properties must provide a stable 8income and have a value of over £10 million

• Borrowers will need to provide information on how property and tenancy management services will be provided, and

• Properties must be located in the UK.

The government will also provide loans for the construction phase of the development via its separate Build to Rent fund, details of which can be found on the gov.uk website.

Investors are currently being approached to buy £265 million of 10 year bonds with HSBC and the Royal Bank of Scotland acting as bookrunners. The scheme itself has secured an Aa1 rating from credit agency Moody’s and it is likely to secure a similar price to the parallel Affordable Housing Finance programme which so far has raised in excess of £2 billion for the development of affordable homes.

Applications will be made via PRS Operations Ltd and will be subject to full due diligence and approval prior to any offer of finance being made. Application packs can be requested by phone on 020773 9350 or by email prs@venn-partners.com

More information is available from the government’s prospectus and via Venn Partners directly.

No Comments