1. Rentplus Explained Harrow Churches HA Board 24 February 2016 Agenda 4

2. A new approach to affordable housing Nationally and locally the demand for homes far exceeds supply Government focus on home ownership including starter homes, shared ownership and affordable rent to buy Grant funding to Registered Providers (RPs) through the Homes and Communities Agency (HCA) continues to be significantly reduced with a decline of Affordable Rent to March 2018 Impact of changing external environment on affordable housing provision: social housing rent reduction & RP financial capacity for developing new homes, extension of Right to Buy, Housing and Planning Bill implications (e.g. fixed term tenancies, proposed inclusion of Starter Homes in affordable definition of NPPF) Rent to buy is a new option to complement existing models of affordable housing and home ownership, as well as new Starter Homes, promoting mixed tenure Create greater choice for local people and the opportunity to live in a new affordable rent to buy home – rent, save and own

3. Developed by a regional developer, a local authority and a housing association and now growing across the country No capital grant or public subsidy required – fully funded by institutional investors NPPF compliant affordable housing tenure Model accepted by HCA New homes managed and maintained by an approved local RP Highly regarded board and strong governance

4. The Rentplus model

5. How does Rentplus work? (1) Rentplus Local Authorities Land owners and Housebuilders Registered Providers HCA & GLA Partnership to identify suitable sites for Rentplus homes Rentplus homes are included as a new option to improve the mix of tenures as part of Section 106 requirements Rentplus homes can increase the % and range of affordable tenures on new developments Rentplus villages provide early delivery of flexible tenure affordable housing, at scale, creating sustainable communities

6. How does Rentplus work? (2) Homes built to building regulations and local authority agreed space standards Rentplus homes are leased to local partner RPs for up to 20 years Homes are made available at affordable rents to those in housing need through LA waiting list, Home Choice and/or Help to Buy Agent Rentplus homes are available for a period of between 5 and 20 years, on 5-year renewable tenancies

7. How does Rentplus work? (3) Tenants are supported and enabled to move to home ownership by our partner local RP Through a phased approach, beginning after five years, a proportion of Rentplus homes are released for purchase by tenants A gifted 10% deposit is provided upon purchase As homes are sold, Rentplus intends to replace them to maintain the number of affordable homes for rent (MOU)

8. Financing Rentplus Ambitious business plan approved to deliver an initial 5,000 completed homes as part of an 8,000 home pipeline nationally. This is scalable, in response to Government commitment to 10,000 Affordable rent to buy Pension funds and institutional investors are keen to invest in the affordable housing sector Rentplus offers a mixture of rental income and capital return necessary for a viable investment product The Rentplus model can be grown steadily, and through further investment of capital, create a virtuous circle of investment in a local authority area

9. Update on current Rentplus activity Schemes on site in Plymouth & Sherborne LA engagement in London Strategic discussions with: –GLA –HCA Current pipeline –Barratts –Partnership with Savills to accelerate site identification National PR & Comms: –BBC Spotlight & Tonight programme –Official opening ceremony on 22 March 2016 –Discussions with Mayoral Candidates

10. The benefits of working with Rentplus

11. Working in Partnership with Registered Providers (RPs) Rentplus works in partnership with local RP partner(s) to deliver great customer and landlord services for Rentplus tenants. The relationship includes: Collaboration Agreement – sets out the contractual relationship between Rentplus and RPs Agreement to Lease & 20 year leases for each scheme Bringing sites forward and creating a pipeline of future homes Control over allocations, in accordance with LA requirements Additional income stream Opportunities to purchase properties with 10% discount Organic growth without additional borrowing Creating Value for Money and efficiencies

12. Benefits for Local Authorities A significant increase in the number of homes available at affordable rents and New Homes Bonus payments An approved s106 affordable housing tenure with scope for increased levels of affordable housing Promotes mixed tenure and accelerates delivery of supply to meet local housing needs Can add value to council owned land and may attract a capital receipt for the local authority Each home built creates >1.5 full-time jobs* Takes tenants who purchase off housing lists; if the home is sold on the open market, 7.5% of the sale proceeds passes to LA to invest in future affordable housing Generates local investment in new homes if property is purchased or sold MOU to maintain pipeline of properties to replace sold homes *Labour Needs of Extra Housing Output – Michael Ball Professor of Urban and Property Economics at Reading University, 2005

13. Opportunity for tenants Provides real opportunity for people in housing need who aspire to home ownership and are unable to save a deposit New home at an Affordable rent with support to achieve home ownership No repairing obligations during the rental period Opportunity to demonstrate creditworthiness through a five-year tenancy of rent payments to help mortgage application and to save with Help to Buy Cash ISA Gifted deposit of 10% of the open market value of the property at the time of 100% purchase Home which is planned and integrated as part of open market housing and designed with the future in mind

14. Opportunity for tenants (2) A worked example of likely monthly costs to rent and to buy a 2 bedroom Rentplus property valued at £250,000 for a couple with one child, joint income of £56k and commitments of £750 per month (figs at Dec 15 using Halifax mortgage calculator): Estimated monthly cost: Market rent £1,000 20% Discount £ 200 Monthly rent payable £ 800 On this basis the purchaser will have a total saving of £40,000 or 16% of the market value available for a deposit at year 5. * Rents are planned to increase by CPI plus 1% each year (except 4 years at -1% from 01.04.16). Market value will be determined at time of purchase. On Purchase: Current Market Value£ 250,000 Gifted Deposit of 10% £ 25,000 Potential deposit from Help to Buy ISA£ 12,000 Tax saving£ 3,000 Mortgage required£ 210,000 Monthly payment£ 950

15. LocationMonthly cost for private rented three bed house (Rightmove) Monthly cost for Rentplus three bed house (at 80% of market rent, or, at/or below local housing allowance levels) (directgov.uk – LHA rates) Household saving (per month) Household saving (over 12 years) Hillingdon & Uxbridge £1,300-£1,595£1,120£280 (against average market rent of £1,400) £40,320 Ruislip£1,550-£1,760£1,313£337 (on £1,650) £48,528 Hayes£1,400-£1,600£1,181£319 (on £1,500) £45,936 West Drayton£1,400-£1,595£1,181£319 (on £1,500) £45,936 Opportunity for tenants (3) – LB Hillingdon

16. LocationMonthly cost for private rented three bed house (Rightmove) Monthly cost for Rentplus three bed house (at 80% of market rent, or, at/or below local housing allowance levels) (directgov.uk – LHA rates) Household saving (per month) Household saving (over 12 years) Harrow£1,350-£2,000£1,138 (LHA) £537 (against average market rent of £1,675) £77,328 Brent£1,850 – £2,600 £1,138 (LHA) £1,049 (on £2,187) £151,056 Hounslow£1038 - £1950£1,138 (LHA) £412 (on £1,550) £59,328 Opportunity for tenants (3) – London general

17. Opportunity for tenants (3) – Aylesbury Vale Location Monthly cost for private rented three bed house (Rightmove) Monthly cost for Rentplus three bed house (at 80% of market rent, or, at/or below local housing allowance levels) Household saving (per month) Household saving (over 12 years) Aylesbury£875-£1,400£862 (LHA) £288 (against average market rent of £1,150) £41,472 Princes Risborough £1,295-£1,395£862 (LHA) £483 (on £1,345) £69,552 Thame£1,050-£1,695£862 (LHA) £513 (on £1,375) £73,872 Wendover£1,350£862 (LHA) £488 (on £1,350) £70,272 Plus: Fuel cost savings in addition to stability for employment, schools and healthcare

18. Rentplus for the wider community Rentplus developments: are designed with and for the local community are built to high quality standards promote community safety help tackle fuel poverty provide resident choice are attractive for ownership provide an opportunity to rent, save and own are made available to those in housing need and priority groups such as those in training, working families, key workers and armed service personnel

19. Benefits for House Builders Working in collaboration to support delivery and unlock stalled developments Ability for early delivery of affordable housing and Rentplus villages to generate improved cash flow and assist in infrastructure funding Positive impact on open market sales and values Complementary to, not competition for, open market sales or starter homes Significant institutional investment available to deliver Rentplus homes at scale and pace, on a project or programme basis Satisfies both affordable rent and intermediate tenure requirements for NPPF Avoids need to “pepperpot” or even cluster affordable housing across all phases, leaving unfettered land for future phases

20. Next steps Board approval to enter into partnership: Collaboration Agreement with agreed areas Agreement to Lease Rentplus due diligence & Board approval to proceed Joint working to identify sites

21. Thank you Richard Connolly CEO Rentplus Sue Coulson Director of Partnerships Mob: 07402 066415 Rentplus office Tel: 01752 388940 www.rentplus-uk.com