BMO Real Estate Partners (BMO REP) and Home Group said their unique BMO UK Housing Fund will provide high quality, purpose-built affordable rental homes for key local workers, “satisfying the needs of a range of stakeholders – from local authorities through to investors and central government”. 

The fund has been pitched as providing Home Group with a way to secure long-term additional investment to allow them to continue to deliver affordable housing.

An innovative and unique financial model, devised by Home Group, underpins the fund, which flexes to suit the needs of the build location, as well as the varying needs of renters. Flexible Rent is a scalable ‘build to rent’ product, which provides a high quality mix of private and discounted rented homes for people on a variety of incomes.

Mark Henderson, Home Group chief executive, said: “We are continually looking at new ways of working in-order-to disrupt the housing market. Partnering with some of the best in the business is what we have always done, and will continue to do so, in order to deliver the right homes in the right places for those who need them.

“As a country, we aren’t going to be able to build the homes we need without innovative approaches. A larger, professionally managed Private Rented Sector (PRS) will have a positive impact in driving up standards. Making private renting better is crucial to ensuring everyone has a safe and affordable home to live in.

“By expanding Home Group’s housing delivery model into the PRS, through the relationship with the BMO UK Housing Fund and with the utilisation of the Flexible Rent leasing mechanism, we’re able to offer the sector the potential to provide more of the homes we need at an affordable level with funding coming from the private sector. It does not need Government grant – yet can operate at scale.

“We are experts in housing management and have a strong track record in delivering successful large-scale projects, with the highest rating from the HCA - one of the few housing associations fully compliant with HCA good governance and financial viability.

“Local authorities and other stakeholders working with Home Group will benefit greatly from this genuinely innovative funding model.”

Angus Henderson, head of business development at BMO REP, said: “This Fund enables us to provide a much-needed housing solution to lower and middle-income earners, with the added opportunity to deliver a robust social agenda while generating sustainable income-based returns with inflation-linkage for investors.

“To achieve this, Home Group was very carefully selected as BMO REP’s development and operating partner thanks to its long-term track record and deep-seated experience in building and managing large scale housing solutions, with an emphasis on improving the private rented sector with a management responsible approach. We have identified a significant pipeline of short to medium term opportunities which we are hoping to take advantage of, imminently.”

Investment in the fund will be governed by a robust social agenda, aligning with rigorous ESG and impact investment objectives which have already attracted highly regarded impact investors such as Big Society Capital.

Anna Shiel, head of origination at Big Society Capital, added: “The current failings of the private rented sector are widely documented: unaffordable, poor quality, insecurity of tenure, to name only a few. There is an urgent need to address the undersupply of high quality, affordable private rented sector housing for those on low to average incomes who cannot afford to own their own homes.

“An essential part of solving the housing crisis is tackling the problems experienced by tenants and improving the quality and range of choice of housing options available to people living in the PRS. The Flexible Rent model has the potential to contribute to this through the delivery of new professionally managed affordable rental homes, expanding the current build to rent offering to a wider market.

“Social investment seeks to connect capital with social sector organisations achieving impact; this strategy brings together a unique partnership between BMO Real Estate Partners and Home Group, a housing association with a strong social mission and demonstrated track record of delivering affordable homes and tests an innovative and impactful housing rental model.”