The BMO UK Housing Fund has completed the acquisition of the Hughes House scheme in Liverpool city centre, through a €47m (£40m) forward funding agreement, signalling the first round of deployment for the Fund. The agreement will provide 258 new homes for the city. The Fund aims to address a distinct gap in the UK housing market by delivering high quality, sustainable, community-based rental property, targeted at low to middle-income households whose needs are not currently being met by the existing private rented sector.
Located on London Road, the scheme sits within the local regeneration and employment initiative known as the Knowledge Quarter & Fabric Quarter, which are offering wider community and built environment improvements with good access to outdoor pursuits and open green spaces. The scheme is ideally located for those residents working for some of the largest key worker employers in the city, with the Royal University of Liverpool Hospital as well as both Liverpool John Moores University and The University of Liverpool all within walking distance, in addition to city centre workers. The scheme also has strong access to transport links with Lime Street Station just a six-minute walk away.
Once complete the 258-unit scheme will comprise 144 one-bedroom apartments, 99 two-bedroom apartments and 15 studio apartments and will operate Home Group’s innovative flexible rent leasing mechanism, which provides a flexible mix of market rent and discounted rent units. Home Group Developments sourced the project and is the main developer working with UK Land and Property and Equans (part of ENGIE Group) to build out the scheme.
Peter Lowe, Fund Manager at BMO Real Estate Partners, the investment advisor to the Fund, said: “This acquisition provides us with an opportunity to support the delivery of affordable private rental housing in Liverpool while also generating sustainable, inflation-linked long term income returns for investors. The scheme will enable us to satisfy local demand, particularly from key workers employed within the local authority, city centre hospitals and nearby universities. We expect to follow up this acquisition with a further pipeline of near-term opportunities as we continue to support the delivery of affordable housing solutions across the UK.”
Richard Kirby, Head of UK, BMO Real Estate Partners said: “We’re proud to utilise our responsible investment credentials in partnership with Home Group to promote private capital’s role in delivering and operating long term rental properties for local key workers. It is also important that while this Fund has clear social objectives it aligns to our philosophy of creating sustainable real estate by also prioritising environmental considerations and promoting sustainable living, ultimately creating thriving communities for the long term and supporting income generation for our clients.”
Wren Laing, Investment Director, Big Society Capital said: “The current failings of the private rented sector are widely documented: unaffordability, poor quality, insecurity of tenure, to name just a few. An essential part of solving the housing crisis is tackling the problems experienced by tenants and improving the quality and range of choice of housing options available to people living in the PRS. The Flexible Rent model has the potential to contribute to this through the delivery of new professionally managed affordable rental homes, expanding the current build to rent offering to a wider market. Social impact investment seeks to connect capital with social sector organisations achieving impact; this strategy brings together a unique partnership between BMO Real Estate Partners and Home Group, a housing association with a strong social mission and demonstrated track record of delivering affordable homes and tests an innovative and impactful housing rental model.”
