Runnymede has become the latest local authority to move into the private rented sector.
The Surrey council has created an investment vehicle which will buy the private rented sector element of a £70m project, and has another five potential opportunities in the pipeline, as it seeks answers to the housing crisis.
Runnymede’s plan imitates Newham council’s Red Door vehicle and Ealing council’s Broadway Living.
John Rice, head of commercial services at Runnymede, said: “There are three objectives. The first is to create the most commercially advantageous offer for the residents of Runnymede; the second is place shaping; and the third is to support the local economy.”
Runnymede’s investment vehicle, RBC Investments, will be funded by a loan from the council, which itself has borrowed development finance from the Public Works Loan Board. No private money is being used.
Its first project is the PRS element of Addlestone One, a £70m mixed-use development in Addlestone town centre. The council owns the six-acre development, which Bouygues is constructing.
After considering a sale of the site on completion, the council has decided to retain ownership and manage it itself.
The scheme will include 115,000 sq ft of commercial space and 213 homes, 100 of which will be managed as a PRS asset. Of the 113 remaining homes, 35 will be affordable, 18 shared ownership and 60 sold on the open market.
On completion in 2017, the scheme will deliver an annual income of £3.5m, reflecting a yield of 6.7%.
The development is the first of six the council is planning to fund itself. The other five will include more than 150 homes, student accommodation and shops across three brownfield sites in Egham and another two in Addlestone.
Colliers International is advising Runnymede.
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