Figure 1 want an affordable rent – currently our portfolio is middle-market and we charge an average of £220 per week. We are buying land in less expensive but accessible parts of London in order to build homes specifically for market rent. They want quality design – we are learning from our existing tenants about design improvements they desire. They also want security and stability. We are therefore considering using time limited Assured Tenancies (or longer ASTs) for this group – say for five to ten years. We are also discussing the offer in terms of management and maintenance. If it were possible for tenants to self manage and carry out their own repairs and improvements we could theoretically reduce the rent.
Right now, HAs, including us, are well positioned to provide new homes to be let in the private rented sector. We are well positioned because we have 50 years experience of providing homes and good quality management services. We understand the commercial risks and we have the financial capacity to keep growing. Growth of our Market Rent portfolio fits with our overall growth plans – due to reduced grant levels we need to generate more surpluses and being an established PRS player hedges against the risk that the sales market might stall. Growing our PRS business provides much needed homes that we will hold in the long-term – along with reasonable returns to reinvest in building more homes. We have 720 market rent homes in the development pipeline which will be let over the next three years, with a further 780 planned. Overall this will represent an investment of £500m, in our Market Rent portfolio by 2018.
Those in average or low paid employment could historically rely on the social rented sector, especially when they started a family. As numbers have decreased (right to buy, and increasingly conversion to affordable rent), needs have increased and most lettings now go to the most vulnerable. The so called squeezed middle, who used to rent until they had children, are now – if they want or need to stay in London – having to continue private sector renting into their thirties or forties. At NHH we believe that helping this group – who are the same people who access our Shared Ownership product – is part of our social mission. Having identified this customer group – the working poor, the keyworkers, the struggling, indebted families, people who need some help from housing benefits to pay the rent but are broadly self sufficient – we are now trying to make sure our offer meets their needs. They tell us they
This is a young business for us and, although we can draw on our traditional experience, during our period of quiet growth we have learned valuable lessons about managing a PRS business – we now have conversations about ‘gross to net leakage’ and get strange looks from our colleagues who manage our social housing. As we move to the next phase of growth we are looking at re-branding and modernising our IT for the NHH ‘Market Rent’ business so that we set out our stall more clearly to customers looking to make ‘rent or buy’ decisions with NHH. For NHH we believe we can address a gap in the London market: quality homes, professional management service, greater security and affordable rents. As a not for profit business with 50 years of development and management experience we believe we can make a better offer to Londoners who have limited choices today. Andy Belton Notting Hill Housing 25