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Another developer that has withdrawn from the scheme, who would not be named, said: “the Build to Rent fund was just another vehicle [for] bringing more availability and more supply to the market…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
News
people
News
Amazon's drones were unveiled last year.
business
Arts and Entertainment
Russell Tovey, Myanna Buring and Julian Rhind Tutt star in Banished
tvReview: The latest episode was a smidgen less depressing... but it’s hardly a bonza beach party
Life and Style
Worth shelling out for: Atlantic lobsters are especially meaty
food + drink
News
i100
Sport
Gareth Bale
footballPaul Scholes on how Real Madrid's Welsh winger would be a perfect fit at Old Trafford if he leaves Spain
Arts and Entertainment
Lily James in ‘Cinderella’
film
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Claims Administrator

£16000 - £18000 per annum: Recruitment Genius: A position has arisen within th...

Ashdown Group: Development Manager - Rickmansworth - £55k +15% bonus

£50000 - £63000 per annum + excellent benefits : Ashdown Group: IT Manager / D...

Recruitment Genius: Security Officer

£16500 per annum: Recruitment Genius: Applicants must hold a valid SIA Door Su...

Ashdown Group: Business Analyst - City, London

£50000 per annum: Ashdown Group: Business Analyst - Financial Services - The C...

Day In a Page

The saffron censorship that governs India: Why national pride and religious sentiment trump freedom of expression

The saffron censorship that governs India

Zareer Masani reveals why national pride and religious sentiment trump freedom of expression
Prince Charles' 'black spider' letters to be published 'within weeks'

Prince Charles' 'black spider' letters to be published 'within weeks'

Supreme Court rules Dominic Grieve's ministerial veto was invalid
Distressed Zayn Malik fans are cutting themselves - how did fandom get so dark?

How did fandom get so dark?

Grief over Zayn Malik's exit from One Direction seemed amusing until stories of mass 'cutting' emerged. Experts tell Gillian Orr the distress is real, and the girls need support
The galaxy collisions that shed light on unseen parallel Universe

The cosmic collisions that have shed light on unseen parallel Universe

Dark matter study gives scientists insight into mystery of space
The Swedes are adding a gender-neutral pronoun to their dictionary

Swedes introduce gender-neutral pronoun

Why, asks Simon Usborne, must English still struggle awkwardly with the likes of 's/he' and 'they'?
Disney's mega money-making formula: 'Human' remakes of cartoon classics are part of a lucrative, long-term creative plan

Disney's mega money-making formula

'Human' remakes of cartoon classics are part of a lucrative, long-term creative plan
Lobster has gone mainstream with supermarket bargains for £10 or less - but is it any good?

Lobster has gone mainstream

Anthea Gerrie, raised on meaty specimens from the waters around Maine, reveals how to cook up an affordable feast
Easter 2015: 14 best decorations

14 best Easter decorations

Get into the Easter spirit with our pick of accessories, ornaments and tableware
Paul Scholes column: Gareth Bale would be a perfect fit at Manchester United and could turn them into serious title contenders next season

Paul Scholes column

Gareth Bale would be a perfect fit at Manchester United and could turn them into serious title contenders next season
Inside the Kansas greenhouses where Monsanto is 'playing God' with the future of the planet

The future of GM

The greenhouses where Monsanto 'plays God' with the future of the planet
Britain's mild winters could be numbered: why global warming is leaving UK chillier

Britain's mild winters could be numbered

Gulf Stream is slowing down faster than ever, scientists say
Government gives £250,000 to Independent appeal

Government gives £250,000 to Independent appeal

Donation brings total raised by Homeless Veterans campaign to at least £1.25m
Oh dear, the most borrowed book at Bank of England library doesn't inspire confidence

The most borrowed book at Bank of England library? Oh dear

The book's fifth edition is used for Edexcel exams
Cowslips vs honeysuckle: The hunt for the UK’s favourite wildflower

Cowslips vs honeysuckle

It's the hunt for UK’s favourite wildflower
Child abuse scandal: Did a botched blackmail attempt by South African intelligence help Cyril Smith escape justice?

Did a botched blackmail attempt help Cyril Smith escape justice?

A fresh twist reveals the Liberal MP was targeted by the notorious South African intelligence agency Boss