Thousands of new homes for rent are to be built across the UK through a major deal that has the backing of Prime Minister David Cameron.
Residential and urban regeneration specialist Sigma, has agreed a major joint venture with Gatehouse Bank plc which will support the roll-out of an initial 2,000 new privately rented residential properties across the North West, with the development cost estimated at £200m.
Around 550 new rental homes will be built across Merseyside in the initial phase. Gatehouse is a leading London-based Shariah compliant investment bank with a real estate portfolio worth in excess of £1 billion across the UK and US.
Prime Minister David Cameron and Business Secretary Vince Cable have confirmed their support for the joint venture and its wider plans to build up to 6,600 high quality new rental homes across the UK, including the North West, at a total development cost of £700m.
Under the terms of the joint venture, Gatehouse will deliver the equity element of the venture and both parties are in negotiations with a number of leading banks for bank financing to complete the initial development phase. Once bank finance is in place, construction is expected to take place over 24 months, with the new homes being delivered in phases.
The new rental homes on Merseyside will be built on land procured and developed by Sigma and the model is underpinned by Sigma’s long term partnership with Liverpool City Council.
Sites have already been identified across the Merseyside area, predominantly in Liverpool, complemented by developments in Knowsley and St Helens. Construction is expected to commence in the first quarter of 2014. The high quality housing stock will assist with the regeneration objectives of Liverpool City Council and supports the Mayor’s pledge to build 5,000 new homes in the city over the next three years.
Sigma’s partnership with Liverpool City Council – Regeneration Liverpool – has invested heavily in the region, building 300 new homes and is currently developing a major secondary school, St John Bosco, in Croxteth.
Regeneration Liverpool has also signed option agreements to redevelop the derelict site of the former Queen Mary School and to develop a significant commercial area south and east of Lime Street Station in the centre of Liverpool.
Sigma’s agreement with Gatehouse also provides for the delivery of a portfolio of a further 4,600 high quality new privately rented homes across the UK, with Gatehouse retaining an option to commit to the equity element of the estimated £500m of financing required.
Prime Minister David Cameron said: “As part of our plan to help Britain succeed, we are determined to build a rebalanced economy across the country. As we compete in a tough global race, Sigma’s joint venture with Gatehouse is brilliant news for the North West and for Britain, showing that we are open for business.
“The rental market is a vital asset to this country and this new investment will help to boost local economies, create jobs and deliver more homes for hardworking people. And it’s on top of the wide range of measures we’ve already introduced to get Britain building, including our new Build to Rent fund, and the billions we’re investing towards delivering the fastest rate of affordable house building for two decades.”
Vince Cable, Secretary of State for Business, Innovation and Skills, added: “Today’s announcement from Sigma Capital Group and Gatehouse Bank will create thousands of modern new homes to rent as well as new jobs in Liverpool and Greater Manchester, with similar plans for other regions in the country.”
Graham Barnet, Chief Executive of Sigma, said: “We are delighted to be working with Liverpool City Council to deliver this significant investment in support of the Mayor’s housing targets and regeneration objectives. The first phase of development will deliver 500 high quality new rental homes, with the potential for substantially more.
“We have developed an innovative joint venture model designed to deliver high quality homes in areas of the country where rental housing is in extremely short supply. Gatehouse has substantial knowledge of and expertise in the UK property market and has shared our vision for this project. I am delighted that we are now working together to deliver the roll-out of our model, which has the potential to create one of the largest new build privately rented residential portfolios in the UK.
“We are also extremely pleased to have the support of the Prime Minister and the Business Secretary for this new venture.”