The £60m loan for Creekside Wharf in Greenwich is seen as an important step forward for the offsite sector but more needs to be done to ensure lender confidence says author of Farmer Review.
The four-year deal, funded equally by RBS and HSBC will finance the scheme, which is being developed by private rental specialist Essential Living and designed by Assael Architecture.
A quarter of the apartments will be discounted to accommodate low-income households designated by the local council.
Discount market rent (DMR) homes will be priced from 55% of market rent and blended in with the market-rented apartments. As such, it will be the first housing development to include DMR apartments, which are now set to be rolled out more widely under plans announced by the mayor of London.
The development is made up of one 23-story block and one 12-storey block, designed exclusively for families. Creekside Wharf will be one of the tallest residential buildings to be constructed using volumetric pre-manufactured off-site methods. It won a Project Award for Private Rented Sector Development at the Housing Design Awards and Best Housing Project at the Sunday Times British Home Awards. Both judging panels specifically highlighted its innovative design and the 25% provision of DMR homes.
Scott Hammond, managing director at Essential Living, welcomed the deal that would help bring forward the project. “The market is continuing to grow more comfortable with the emerging build to rent business model…Against a backdrop of global uncertainty, we believe the defensive nature of residential investment will become increasingly attractive to investors and lenders,” he said.
Chiara Zuccon, Head of Private Rented Sector at RBS, said the bank was committed to supporting the UK’s housing agenda and building homes that are purpose built for rent has an important role to play in increasing and diversifying the country’s housing supply.
“We believe Creekside Wharf, with its provision of affordable housing and its innovative use of modular construction, will be another standout scheme that will greatly enhance the local community,” he said.
Mark Farmer, founder of property consultancy Cast and author of the Farmer Review of the UK Construction Model, welcomed the news but highlighted issues for the offsite sector that needed addressing.
He told Building4Change: “The debt financing of Essential Living’s Greenwich scheme represents real progress in the journey of driving more value off-site. The natural alignment between the build-to-rent sector and the offsite sector that this project showcases, holds significant potential for building the long term, more stable demand profile that investment in pre-manufactured solutions requires.
“However, this funding deal was not straightforward and encountered many barriers. Two particular issues were relevant here, which are both addressed as recommendations of my recent government review. Firstly the need for more interoperability of offsite-based systems to ensure banks can get comfortable with project completion routes in the event of financial failure and secondly, the need for business covenant / security support from government in certain circumstances.”
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