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The Actuary The magazine of the Institute & Faculty of Actuaries

Pension funds targeted as potential landlords by HCA

The Homes and Communities Agency (HCA) is in talks with pension funds and other large business groups in an attempt to attract investment into the institutional private rented sector to alleviate the housing crisis. The scheme would encourage such investors to fund the development of new homes specifically for private rent.

The objective of the HCA’s Private Rented Sector Initiative (PRSI) is to create an opportunity for investors to enter the private rented sector on a large scale for the first time. At a point in the economic cycle when there is strong investor appetite for low-risk investment focused on income distribution and a longer-term investment horizon, the HCA believes that this is the perfect time to expand the private rented sector.

The initiative will form a key part of the package of proposals at the heart of the Government’s forthcoming response to the Rugg Review of the private rented sector.

Sir Bob Kerslake, chief executive of the HCA, said: “Our initiative is one of many innovations we have used to attract new investment, kickstart stalled housing schemes and mitigate against the effects of the market downturn.

“To date, achieving scale has been one of the main barriers to attracting institutional investors into the housing sector. We believe there is an opportunity now for the HCA to work with developers and housebuilders to offer a pipeline of projects for the PRSI, which could result in a positive outcome for all stakeholders.

“But it is only potential at this stage — we will engage with the private sector to develop a market-driven proposition that is attractive to investors. Projected rental yields and the current market suggest that the time is right, and that is why we are engaging with the market to develop the proposition further.”