Thames Valley Housing (TVH) has launched a pioneering initiative which offers a viable long-term solution to providing high-quality homes for the private rental sector on a large scale.
The project aims to build a portfolio in excess of 1,000 apartments available for private rent targeted at young professionals in London and the South East. So far, TVH has acquired 63 apartments which will be available for rent in Epsom this summer. Plans are to fund this £200m investment programme with £120m debt and £80m equity, with TVH being a significant equity participant.
The portfolio will be managed and let by FizzyLiving Limited, a new commercial subsidiary of TVH. FizzyLiving will offer customers good-quality accommodation, in easy-commutable locations, and a management service that makes life simple. It is a package that is currently lacking as an option for young professional 25 to 35 year olds in the private rental sector.
Harry Downes, FizzyLiving’s managing director, said “Only a few young professionals can obtain mortgages so the only option is to rent. Housing tenure has fundamentally shifted right across the UK and the private rental sector is expected to grow as owner occupation becomes little more than a pipedream for the majority of young people. But there is an acute shortage of professionally managed high-quality accommodation available for private rent to young professionals, and this is the gap we aim to fill. Our vision is to create a product and brand associated with excellence that satisfies the requirements of aspirational young professionals. We refer to this group as the ‘rentysomethings’.”
Geeta Nanda, TVH’s chief executive, said: “This initiative is a logical extension of a major area of our expertise – managing rental properties, and the financial model makes sense with a forecasted internal rate of return of 15 per cent. This will generate an income to invest in social housing as well as enable us to provide much needed quality homes for young people who would normally be at the mercy of the highly variable standards of the current private rental sector.
“The government and many bodies concerned with housing have long called for the creation of a vibrant sector of professionally managed decent homes for private rent, which is a major contributor of homes in Germany, US and France. This initiative is an important move towards providing an answer.”
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Notes to editors:
• Thames Valley Housing:
Thames Valley Housing, based in Twickenham, South West London, was founded in 1966. The association owns, manages and administers loans for over 14,000 properties in London, Berkshire, Surrey, Hampshire, Oxfordshire, Buckinghamshire, Wiltshire and Sussex, and has 679 properties under construction. Thames Valley Housing provides affordable rented homes, shared ownership, market rent, student and key worker accommodation, working with eight NHS Trusts. In year 2010-11 the association provided 1,175 new homes and generated a financial surplus of £11.2 million.
• FizzyLiving Limited:
FizzyLiving Limited is wholly owned by TVH, who on behalf of the new company will collect the rents and cover management fees, service and maintenance charges from this income. To expand the portfolio, TVH is seeking equity partners and debt providers to raise £180 million in finance to acquire new blocks of around 100 units.