Chancellor George Osborne launched the £200m scheme as part of the Autumn Statement. The Government has now revealed plans to increase the fund to £1bn as part of the Budget today after the scheme became “significantly oversubscribed.”
The fund provides equity or loan finance to support the development finance stage of building new homes for private rent.
The Build to Rent fund was launched in response to the recommendations of the Montague report which was published in August.
Chairman of private equity group 3i Adrian Montague compiled the review on the back of the rise in rents against earnings and also the dominance of small landlords, where just 1 per cent of private landlords own more than 10 properties.
It suggested that new homes built specifically for the rental sector should come with a fixed period of years in which they remained rental properties and respondents felt this period should be between 10 and 20 years.
LSL Property Services commercial director David Brown says: “While schemes for first time buyers will be very welcome, it’s the private rented sector that’s increasingly picking up the slack and having to support more and more tenants. Demand is astronomical, and tenant numbers look set to increase even further this year.
“On the same day as the Budget, the UK is also digesting a rise in unemployment – plus a fresh fall in gross mortgage lending. And if this wasn’t enough, property prices are now mounting a fresh rally, while struggling first time buyers face a mounting burden from wider inflation. In this tough economic climate more would-be homebuyers will find themselves forced into the rental sector.
“Until the economy can sustain real wage growth, the sails of the private rented sector will be billowed by record numbers of tenants.”