Homes and Communities Agency (HCA) proposed to seek institutional investors to get involved in the private residential sector to help to relief the current situation of the property and housing market.

Homes and Communities Agency (HCA), a non-departmental public body supported by Communities and Local Government Department, has announced a plan encouraging pension funds and other financial institutional investors to invest in the private rental market on a large scale.

HCA will publish a document outlining a detailed plan of this large-scale investment to present it to the interested parties. The document will mention government’s consideration for the scheme on a range of options offers to institutional investors with guarantees if too many properties are left un-let. This scheme, so far, has received positive response from the public since announcement.

Institutional Investors and Pension Funds are either expected to get involved with the house-building industry and funding contractors in building new rental properties or to buy up the existing available properties to build up their rental portfolio.

It is still an early stage of the scheme and about 8 organizations showed huge interest in this, including two housing associations and one large Pension Funds - Legal & General. Legal & General has even been talking with the government for months on a long-term funding model for the property private rental market.

How does it help the market?

1. More funding in the property market from large investors
2. Helping house-builders to reduce the risk of not having buyers
3. To send a relief from current situation on:
   1. Alleviating the shortage of housing in the United Kingdom
   2. Increasing sources of housing

Attractive offers to Pension Funds and Institutional Investors

The fall in property prices makes the offer look “much more attractive”, said Peter Cosmetatos, Director for Finance of British Property Federation (BPF). He also added, “this is a rare opportunity at this point in the cycle for institutional investors to invest in an asset class that provides an excellent hedge against inflation at a good price”*.

Furthermore, Pension Funds are going to be beneficial from the investment in terms of “income stream, capital gains and inflation potential”, as analysed by Dr Ros Altmann - Pension Consultant. All these positive comments seem to reflect a good reputation on the scheme.

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