Rental fund plan could grow after £1bn investor interest

Plans to set up a government-guaranteed fund to invest in homes for private rent are to be expanded after the scheme received £1bn worth of serious interest from investors.

The Homes and Communities Agency (HCA) is now deciding whether it can set up more funds than originally planned. Steve Carr, head of new business and economics at the HCA, said: “We were thinking of setting up one. Now we may look at two, three or four different initiatives.”

The HCA said last week that 64 firms had registered an interest in the private rented housing initiative, which involved asking investors for cash in return for minimum rental guarantees on new homes but the agency did not say how many were from investors willing to put money forward. Carr said the number of bids that came from serious investors was “certainly in double figures” and totalled more than £1bn.

Carr said the HCA would not look to procure a partner through standard procurement routes, and would instead set up a joint venture, with a shortlist expected next month.

The funds are seen as central to the government’s plan to get housebuilding moving during the downturn, and comes as Sir Bob Kerslake, the HCA’s chief executive, outlined his vision for the sector on Tuesday at this week’s annual Chartered Institute of Housing conference in Harrogate.

He announced that the HCA was setting up a group of bankers and financiers to find ways to source new cash for social housing.

He also told Building the HCA was looking at ways to cut construction costs. He said: “We are looking at whether there is scope to improve efficiency in procurement and reduce costs. We have had feedback that this is possible and we would like to talk to the industry and see. Land values have fallen. but we have to look at construction costs.”