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The ‘Racing Bond’ - provision of affordable housing to support rural employers

The ‘Racing Bond’ - provision of affordable housing to support rural employers. Rural Housing Advisory Group 23 January 2014. Contents. Identifying the need The solution - four elements Legal agreements Issues . 1. Identifying the need. Donoughue report 2004.

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The ‘Racing Bond’ - provision of affordable housing to support rural employers

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  1. The ‘Racing Bond’- provision of affordable housing to support rural employers Rural Housing Advisory Group 23 January 2014

  2. Contents • Identifying the need • The solution - four elements • Legal agreements • Issues

  3. 1. Identifying the need

  4. Donoughue report 2004 • Low cost accommodation major problem for employers • Less tied accommodation • Only 5% staff access local social housing • Low wages and mobility limit options

  5. British Horseracing Board Survey 2005 (of 228 Employers)

  6. Looking for a new solution • Donoughue: ‘the BHB should work with employers to develop a blueprint to improve the supply of affordable accommodation’ and in particular address ‘ways of financing and building new affordable accommodation’

  7. 2. A solution

  8. Four elements Housing association Racing industry Housing association Racing industry

  9. Financials – achieving affordability • Three options: • Low cost land • Sale of nomination rights • Bond capital with a ‘social rate’ of return for investors • Possible fourth source: • Homes and Communities Agency grant funding

  10. Land supply • From within industry • Rural exception sites • Long leasing of land • Minimum 60 years • Reversion includes high quality property • £1,500 income per acre pa • Nil capital sum to developer

  11. Nomination Rights • For term of lease • Assignable and mortgageable • Housing association manages and allocates • Assured shorthold tenancies • Racing Welfare acting as broker and bulk purchaser • Estimated cost £30,000 per nomination right

  12. The Bond • Terms • Private placement • First issue - £5 million (500 homes) • Minimum investment £20,000 • 2.5% pa fixed return, emphasis on social benefits • 10 year term (Hastoe purchase of forward fix) • Terms to restrict housing for racing employees • Asset security from Hastoe • Investors: • Anchor £2.5 million (Levy Board) • Other investors: Trusts, individuals, racing bodies

  13. 3. Legal agreements

  14. Contracts Bond Co

  15. 4. Issues

  16. Issues • New form of tied accommodation? • Local authorities and views of their nomination rights on exception sites • Components of solution already in industry • Any major rural employer? • Too complicated?

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