A new report on investment in the Private Rented Sector (PRS) highlights the need for dedicated vehicles, such as Sigma’s PRS REIT, to accelerate the delivery of high-quality, private rented family housing. In particular, The PRS REIT plc has managed to establish a channel for local authorities, developers and investors to work alongside each other to achieve this.
Some of the UK’s leading institutions have already invested in Sigma’s The PRS REIT plc, including Aviva, AXA, Hendersons, Deutsche Bank and government’s Homes England (formerly HCA).
The report; ‘How local authorities can foster investment by corporate landlords in new private rental housing’, prepared by university professors, Tony Crook and Peter A. Kemp, states that local authorities are ideally placed to create a modern, private rental offering by working closely with investors and developers.
Under supply and slow development in the housing market have caused prices to rise, which has in turn led to an increase in the number of people renting, putting a further strain on rental supply, an issue recognised by government in its housing whitepaper. It is Sigma’s high-quality product (built by construction partners Countryside Properties, Engie and Keepmoat Homes) and speed of delivery, which puts The PRS REIT plc in the perfect position to respond to local authority requirements. Importantly, Sigma’s focus is very different to many other major PRS developers – Sigma is the only private rental brand offering private rental houses (as opposed to city apartments) at this volume in the UK.
Aside from the speed of delivery, Local authorities can be confident that the houses and grounds are well-maintained, and tenants are looked after by a dedicated customer service team. The PRS REIT homes are purpose built, in carefully considered locations close to well performing schools and public transport links, answering a long-neglected need in the rental market for families.
Through Sigma’s delivery platform, authorities have seen areas improved through pioneering regeneration, with brownfield and vacant sites being transformed. Sigma’s development and regeneration has also seen significant social, education and health impacts in local areas.
The recent report by Crook & Kemp notes that: “residential property companies can bring their development expertise and development finance” to working with local authorities, which can use planning powers, land banks and long-term pension funding to cut housing shortages.
Sigma’s new homes are marketed under the Simple Life PRS brand, which has been created to improve the tenant experience. With Simple Life, tenants can experience the same standards as homebuyers, with the peace of mind that they’ll have somewhere to call home without the worries that the property will be put on the open market in the near future.
On the 10th January 2018, the PRS REIT released its quarterly update, announcing that the £250 million fund was fully committed, and will deliver over 1,800 new homes. Four sites have already been completed, comprising 264 homes which are now fully let.
The PRS REIT is targeting £1 billion in assets within five years, with an additional current pipeline of around 5,000. It aims to build 10,000+ new rented homes.
Graham Barnet, CEO of Sigma Capital Group plc and Sigma PRS Management Limited, the investment adviser to the company, said:
“The response that we’ve already had to the REIT, in terms of investment and development, shows that there is demand for a unique model like Sigma’s, where developers, land owners and local authorities can work together with aligned interests, such as investor yield, developer growth, housing targets and tenant satisfaction. The shortage of new rental homes across England has been a problem for almost two decades, but it’s something that the REIT has already begun to address. Aligned with the housing whitepaper, local authorities and the REIT can lay the foundations of the rental market of the future, where both tenants and areas are cared for, for the long-term.
“Simple Life rental homes are aimed at the households earning within the UK’s average household income band. Currently, the average family that cannot afford to buy, has little choice and is faced with the prospect of renting relatively poor quality or poorly managed homes. The new homes funded by the REIT are intended to be the polar opposite of this – high quality homes, near to good schools and transport links, offering security of tenure.
“We look forward to continuing to advise and manage the development of what we are confident will be one of the largest private rental portfolios in the UK.”