Help to Buy putting house builders off Build to Rent

 

Dozens of developers have pulled out of the Government’s controversial Build to Rent fund, as a result of rising demand for homes bought under the Help to Buy scheme. The shift to building homes for people willing and able to buy will come at the cost of those who are unable to get mortgages and need to live in rented accommodation.

25 companies have abandoned a £1 billion fund created by the government to build new homes for people to rent, according to Construction News. The list of those who have dropped out of the first phase of bids includes some of the country’s biggest homebuilders, such as Persimmon Homes, Countryside, Lovell Partnerships, and Taylor Wimpey. There were originally 43 developers on the first phase shortlist, announced in April 2013. One year on, there are just 18 on the list – a list which includes housebuilders Crest Nicholson and Bovis Mill Group, and contractors Bouygues and Kier.

The Build to Rent fund, set up in 2012, is managed by the Homes and Communities Agency and aims to create 10,000 new homes to rent by 2015 – by offering loans to developers.

Dave Sheridan, chief executive of Keepmoat, one of the companies to pull out, said that Help to Buy had diverted interest away from the Build to Rent fund as “more liquidity entered the market” and that the fund had not been “the right investment model".

Another developer that has withdrawn from the scheme, who would not be named, said: “the Build to Rent fund was just another vehicle [for] bringing more availability and more supply to the market…  but most listed housebuilders and developers build for sale because that is their business model.”

Mark Farmer, head of private residential at asset consultants EC Harris, said that promoting the purchase of homes could come at a cost. “In the run-up to the election, the Government will be looking to play the card around enabling people to access home-ownership. The danger here is that the Build to Rent fund and some of the other initiatives brought in to get PRS [private rented sector] to take off might start to play second fiddle.”

Rachel Fisher, the head of policy at the National Housing Federation, said: “We are concerned that Help to Buy isn’t necessarily increasing supply and may be diverting interest away from building new homes for people to rent. This demonstrates the challenges around delivering private rental at scale.” She added: “We need to be building around 250,000 new homes a year – whether for rent or to buy - but we are delivering just over a 100,000 a year.”

Housing Minister Kris Hopkins said: “Tenants are being given a greater choice of newly built homes to rent thanks to the Build to Rent scheme, which is heavily oversubscribed by developers, and we are well on track to deliver up to 10,000 newly built homes.

“Construction has already started on developments in Southampton and Manchester and today [Friday] we are announcing an agreement for a further 190 homes across six sites including Cambridgeshire and Hampshire.

"This new approach revolutionises the way new homes are built for the rental market, providing more choice and quality for tenants, and increasing competition between landlords offering decent, reasonably priced accommodation."

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Content Writer - Global Financial Services

£25000 - £30000 per annum: Recruitment Genius: From modest beginnings the comp...

Recruitment Genius: Web Developer - PHP

£35000 - £40000 per annum: Recruitment Genius: From modest beginnings the comp...

Recruitment Genius: Field Sales Consultant - Financial Services - OTE £65,000

£15000 - £65000 per annum: Recruitment Genius: This is an exciting opportunity...

Recruitment Genius: Loan Underwriter

£18000 - £20000 per annum: Recruitment Genius: This is a fantastic opportunity...

Day In a Page

Orthorexia nervosa: How becoming obsessed with healthy eating can lead to malnutrition

Orthorexia nervosa

How becoming obsessed with healthy eating can lead to malnutrition
Lady Chatterley is not obscene, says TV director

Lady Chatterley’s Lover

Director Jed Mercurio on why DH Lawrence's novel 'is not an obscene story'
Farmers in tropical forests are training ants to kill off bigger pests

Set a pest to catch a pest

Farmers in tropical forests are training ants to kill off bigger pests
Mexico: A culture that celebrates darkness as an essential part of life

The dark side of Mexico

A culture that celebrates darkness as an essential part of life
Being sexually assaulted was not your fault, Chrissie Hynde. Don't tell other victims it was theirs

Being sexually assaulted was not your fault, Chrissie Hynde

Please don't tell other victims it was theirs
A nap a day could save your life - and here's why

A nap a day could save your life

A midday nap is 'associated with reduced blood pressure'
If men are so obsessed by sex, why do they clam up when confronted with the grisly realities?

If men are so obsessed by sex...

...why do they clam up when confronted with the grisly realities?
The comedy titans of Avalon on their attempt to save BBC3

Jon Thoday and Richard Allen-Turner

The comedy titans of Avalon on their attempt to save BBC3
The bathing machine is back... but with a difference

Rolling in the deep

The bathing machine is back but with a difference
Part-privatised tests, new age limits, driverless cars: Tories plot motoring revolution

Conservatives plot a motoring revolution

Draft report reveals biggest reform to regulations since driving test introduced in 1935
The Silk Roads that trace civilisation: Long before the West rose to power, Asian pathways were connecting peoples and places

The Silk Roads that trace civilisation

Long before the West rose to power, Asian pathways were connecting peoples and places
House of Lords: Outcry as donors, fixers and MPs caught up in expenses scandal are ennobled

The honours that shame Britain

Outcry as donors, fixers and MPs caught up in expenses scandal are ennobled
When it comes to street harassment, we need to talk about race

'When it comes to street harassment, we need to talk about race'

Why are black men living the stereotypes and why are we letting them get away with it?
International Tap Festival: Forget Fred Astaire and Ginger Rogers - this dancing is improvised, spontaneous and rhythmic

International Tap Festival comes to the UK

Forget Fred Astaire and Ginger Rogers - this dancing is improvised, spontaneous and rhythmic
War with Isis: Is Turkey's buffer zone in Syria a matter of self-defence – or just anti-Kurd?

Turkey's buffer zone in Syria: self-defence – or just anti-Kurd?

Ankara accused of exacerbating racial division by allowing Turkmen minority to cross the border