Red Door Ventures, the Newham council-owned development vehicle that was set up to provide private rented homes, is set to drastically scale up the business, with plans to invest outside its borough boundaries.
It is understood this is the first of the many recently formed arms-length council vehicles to do so.
A deal to acquire a recently completed 97-unit scheme on Commercial Road, Whitechapel, E1, will be followed by a similarly sized scheme in Seven Sisters, N15.
Companies House listings also suggest it is looking as far afield as Old Oak Common, W3, and Willesden, NW10, as well as Chobham Farm, E15, part of the 2012 Olympics legacy sites.
Kent Taylor, managing director at Red Door Ventures says: “If it’s within Greater London and meets our stringent financial and design criteria, then we will be interested in acquiring further sites.”
Its original target of having 3,000 homes under management within 10 years looks set to double, with the company now looking to develop around 6,000 homes over the same period.
Red Door is also actively talking to a number of developers in order to partner, either via joint ventures or forward-funding arrangements.
“We want to get in as early as we can ideally. We want to have a stake in the design.” Taylor adds.
It’s not just developers though. Red Door Ventures sees other local authorities as opportunities to expand the business.
“We are actively talking to a number of other local authorities,” says Taylor.
“There are many other similar examples across the board – Croydon’s Brick by Brick and Barking & Dagenham’s Be First. They are all slightly different though and have their own niche way of doing things.
“However, for those local authorities that don’t have a set-up, we would be delighted if they would come and speak to us.
“The creation of a similar vehicle is certainly not an easy process and therefore I would encourage other local authorities to utilise our experience and expertise and allow us to operate as their joint venture partner.
“This way we can share risk and reward and split the profit over the life of the scheme.
“Over the next 12 months we want to have at least one council on board,” says Taylor.
With planning consents now being drawn to a close in Newham, RDV is planning to start construction on a number of larger schemes with closer to 1,000 homes either occupied or under construction by the end of 2018.
After setting up in 2014, four schemes have so far completed, equating to 156 homes under management. Strettons is currently marketing studio apartments at RDV’s Cheviot House development in Whitechapel for between £1,150-£1,400 per calendar month.
An agreement has been reached on a second deal with Sheen Lane Developments for 95 flats on Lawrence Road, N15, another permitted development scheme which is currently under construction and likely to complete early next year.
How does Red Door Ventures work in practise?
The development vehicle is wholly owned by Newham council.
The local authority funds RDV through debt via the public works loan board.
RDV takes the debt at a commercial rate, with the council essentially taking a small cut.
Profit generated through RDV will be returned in the form of dividends to Newham for it to reinvest in the borough for the benefit of residents and people who work there.
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