UK rented housing bond scheme launches with £265m issue

Posted on November 17, 2016

A long-awaited scheme to issue UK government-guaranteed bonds to finance rented housing has launched with a £265m issue.

The bond guarantee scheme aims to boost construction of large-scale rented developments — a rarity in the UK until now — and help to combat a housing shortage by offering cheap funding through 10 to 30-year bonds.

Venn Partners, a real estate lender that is the UK government’s chosen partner for the scheme, is issuing a 10-year bond through its subsidiary PRS Finance, of which £175m is immediately funded. The funds will then be made available to property operators.

While the UK’s rented sector has traditionally consisted of individual homes run by amateur landlords, institutions have increasingly shown an appetite for running large blocks similar to US “multi-family” housing.

The guarantee scheme, which aims to provide £3.5bn of funding, was first announced under the previous Conservative-Liberal Democrat coalition government.

The housing minister, Gavin Barwell, said:

This government is committed to supporting a bigger, better private rented sector and is providing up to £10bn government-backed guarantees to build more quality rental homes. This bond is an important step in strengthening the sector and increasing supply so that it meets the need of tenants well into the future.

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