Explaining Rentplus : A Housing Solution

1. Explaining Rentplus: A Housing Solution 2018

2. Affordable rent to buy and national context • Nationally and locally the demand for homes far exceeds supply • Inability to save a deposit is one of the biggest obstacles to home ownership • Soaring prices and rising rents, not enough of the right homes in the right places creates exclusion and insecurity of tenancy • Recognition that we need a flexible approach to tenure and ownership: creative solutions and a different mind-set are key to avoid doing what we’ve always done • Rentplus’ affordable rent to buy model offers an accessible route to home ownership for those who are currently excluded, with the opportunity to rent, save and own • Facilitates best use of existing social/affordable housing and houses people from the waiting list • Fully-funded solution requiring no government funding

3. Fair rents “Fair Rent” homes outlined as: Rentplus response:

4. NO cost to the public purse FULLY-FUNDED by institutional investors £200m £120m £80m £40m Initial Crestline fundingto build properties BAE Systemspension fundTerm funding Rentplusfund Goldman Sachsbond issues (first programme,uncapped potential) BBB rating (DBRS) Circa £40bn Potential of significant inward investment in affordable housing

5. homes £1.8bn £1.2bn Growing at pace from inception to 2020 £637m 3,440 6,131 9,100 Built, contracted or under offer Future pipeline TOTAL

6. About • Rentplus is an innovative housing solution which delivers the government’s White Paper key objectives: • Affordability • Security of tenure • Institutional investors • Additionality • A broader range of developers and tenures • Rentplus is the leading provider of affordable rent to buy housing, established to help working households unable to access other affordable home ownership options and who are low priority for social housing Many have little hope of getting an affordable rented home and are paying high private sector rents, with no prospect of saving for a deposit; some will have poor credit history, which prevents them getting a mortgage • Rentplus model means ordinary working people can rent, save and then own their own home, an aspiration to which 86% of the population still aspire - despite the lack of a deposit • Rentplus tenants pay an affordable rent (the lower of 80% market rent or LHA cap including service charges), with no repair and maintenance costs, and low running costs, meaning they are able to save towards their deposit

7. About The Rentplus model overcomes these barriers We are the leading national provider of affordable rent to buy housing, giving aspirant home owners a real opportunity to get on the housing ladder, and off councils’ waiting lists: Rentplus tenantscoming fromcouncil waiting lists Tenants have the opportunity to buy their home in 5, 10, 15, or 20 years (depending on their circumstances), with security of tenure until then When they come to buy their home, Rentplus provides them with a 10% gifted cash deposit Fully funded by institutional investors with no public subsidy or grant, we work in partnership with local authorities, housing associations and developers to accelerate delivery and provide genuinely additional affordable homes Housing became less affordable for first-time buyers in 78% of local authorities in 2017 78% MHCLG house building statisticsJune 2018 Tenants moved out of existing social housing, freeing properties for families in greater need 60% 35% Quarterly new build starts 5% less than previous 3 months 8% lower than 2017 Quarterly completions 9% less than previous 3 months* 4% lower than 2017 * estimated

8. across the country • July 2018 changes to National Planning Policy Framework definitions of affordable housing confirmed that Rentplus is an NPPF-compliant affordable housing tenure • This has given more local authorities the confidence to include our model within their housing policies • With a pipeline of 10,000, our ambition is to secure 5,000 homes for families by 2020 and we’re working creatively with local authorities to make this possible Locations Northamptonshire Cambridgeshire Gloucestershire MiltonKeynes Essex Oxfordshire Somerset Devon Dorset Established homes and planned new housing 2018/19 funded new homes Plymouth

9. : working in partnership LocalAuthorities • Partnership to identify suitable sites for Rentplus homes • Rentplus homes included in new developments to improve the mix of tenures – currently through s106 • Rentplus homes can increase the % and range of affordable tenures on new developments • A hybrid affordable housing solution – both affordable rentand LCHO Funders Rentplus Housebuildersand LandPromoters RegisteredProviders

10. : how does it work? Fund Build Lease Let Buy Replace Homes fundedby institutional investors Homes built to building regulations and Rentplus standards Rentplus homes leased to local partner Registered Providers (RP) forup to 20 years Homes initially let at 80% market rent or LHA (incl. service charges) to meet both LA affordable housing andmarket demand 25% of Rentplus homes are soldto tenants if they choose to buy at years 5, 10, 15 and 20 with a 10% gifted cash deposit As homes are sold, Rentplus intends to replace them to maintain numbers of affordable homes

11. : managing the tenancies Support Manage Grow Target Gift Option Tenants supported and enabled to move into home ownership by RP RP partner manages Rentplus homes including repairs, service andcollects rent Rents increasedby CPI +1% annually;rebased every 5 years Tenant agrees at sign-up when their home is available to purchase (5, 10, 15 or 20 years); 5-year renewable tenancies until then 10% OMV gifted cash deposit provided by Rentplus for tenants at purchase S106 cascade allows forsubstitute tenant,RP discounted purchase or saleon open market

12. : working + LAs to deliver affordable housing • If the home is sold on the open market, 7.5% of sale proceeds are given to the local authority to re-invest in future affordable housing • MOU to maintain pipeline of properties to replace sold homes on a one-to-one basis • Increase in the number of affordable homes available and New Homes Bonus payments – additionality to HA/LA affordable housing provision • Opportunities to unlock stalled developments and accelerate delivery: viability challenges or bringing forward stalled sites by forward funding the affordable housing element • Local lettings plan agreed with LA; applications made through local CBL scheme or alternatives to ensure local people housed, for example: • 35%+ Rentplus tenants have moved from existing social housing, freeing up homes to house those in need from the housing register • 60% housed from housing waiting lists • Opportunities for bespoke strategic partnership to support accelerated delivery and strategic growth, garden towns/villages and urban extension sites, supporting SMEs on stalled sites and new construction methods

13. : for tenants • Offers a route to home ownership for working/in training lower income households who can’t get on the housing ladder/have lower priority for social housing • Opportunity to build credit history to help mortgage application and to save with Help to Buy or Lifetime ISA • Provides real opportunity for local people in housing need who aspire to home ownership and are currently unable to save a sufficient deposit • New home at an Affordable Intermediate Rent with low running costs and support to achieve home ownership • No repairs and maintenance obligations during the rental period • Gifted deposit of 10% of the open market value of the property at the time of 100% purchase

14. : Registered Providers (RPs) Working in partnership with local RP partners to deliver great customer and landlord services for Rentplus tenants • Partnership based on framework agreement and site specific 20-year operating leases • No requirement for additional borrowing or using financial capacity to grow/consolidate portfolio; in addition to planned development programme • Bringing sites forward, with joint appraisals and bids, to create a pipeline of future homes • Control over allocations, in accordance with LA requirements • Additional income stream from retained rent income, project management and introduction fees, estate management service delivery • VfM and efficiencies through consolidation of stock portfolio and reduction in overheads • Opportunities to purchase properties with 10% gifted deposit if tenant unable to proceed with their purchase

15. : delivery • For institutional investors: a sustainable, ethical, socially responsible and robust financial model with a blended rental yield and capital return • For government: supports momentum in delivering sustainable homes at scale and at pace; the model is robust against market correction; protects against risk of reduced appetite for home ownership • For local authorities: certainty of delivery of s106 Affordable housing obligations by developers and housebuilders. Bespoke strategic partnerships with emerging LA Local Housing Companies, council housebuilding programmes and garden towns/villages • For registered providers: complementary to existing development programme, growth and income generation without additional borrowing or sales risks, or impact of a reduced appetite for shared ownership and open market sales • For housebuilders: competitive prices, improved viability to unlock stalled sites, certainty of purchase for Affordable housing; upfront financing, doesn’t compete with open market sales • For UK economy: supporting inward investment, growth, funding and delivery of affordable housing, creating jobs and providing short, medium and longer-term investment in home ownership

16. Getting in touch: 0330 229 0035 For further information or questions please get in touch: Online www.rentplus-uk.com @RentplusUK @Rentplus_UK Office 0330 229 0035 info@rentplus-uk.com Our locations Milton Keynes II Exchange Square 21 North Fourth Street Milton Keynes Bucks MK9 1HL Plymouth Floor 2 Studio 5-11 5 Millbay Road Plymouth PL1 3LF London 25 Bedford Square London WC1B 3HH