Housebuilder Crest Nicholson has struck a deal with a real-estate investment firm to fund the delivery of 97 new private rental homes in Bath.
The deal, said to be the first of its kind in the UK, and which is expected to give a significant boost to the emerging build-to-rent market, will see M&G Real Estate fund and subsequently purchase the apartments, which are being built as part of the Bath Riverside development.
Under the terms of the Bath deal, M&G Real Estate will provide £25.2 million to fund the development of the apartments and supporting community space.
Crest Nicholson is both developer and contractor of the scheme, of which the private rented sector (PRS) element will provide a mix of one- and two-bedroom apartments. It is anticipated that the units will be ready for tenancy between February and October 2016. An all-encompassing management service will be administered onsite to ensure a consistent and high standard of service.
“We very much welcome this initial transaction with Crest Nicholson and look forward to working with them on other schemes,” said Alex Greaves, M&G’s head of residential investment.
“We believe this to be the first transaction of its kind between an institutional investor and a listed house builder, marking a major opportunity for institutional investors seeking access to the UK residential sector. Our residential strategy provides stable, income-driven returns for investors and, in time, thousands of much-needed, well-managed rental properties.
“As we build on this initial agreement to bring scale to our portfolio of rental properties, it’s vital we continue to champion quality. It is our hope that the involvement of institutions like ours will lead to more homes coming on tap and higher standards, just as it has done with the student accommodation market. We want our residents to be proud renters because we and our partners have developed high-quality homes.”
Chris Tinker, executive board member for Crest Nicholson, added: “This is an exciting development in Crest Nicholson’s drive to explore new models of housing delivery across the Southern half of the UK. With housing at the forefront of the political agenda, an institutionally funded private rented model has the potential to underpin a meaningful increase in housing output at a time when the need to sustain growth and meet housing need is at an all-time high.
“This type of partnership agreement could mark a step change and acceleration in the PRS model which will ultimately help unlock land, create jobs and bring wider economic benefit as well as bringing forwards the delivery of much needed new homes and mixed tenure communities.”