Real Estate

BMO REP launches UK Housing Strategy with partner Home Group

The initiative is underpinned by an innovative ESG impact policy, overseen by an independent advisory group.
January 2020

Paul Myles

Director, Sales, Relationship Management UK Institutional

James Edwards

Director, Sales, UK Institutional

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Risk Disclaimer

The views and opinions expressed in this article by the author do not necessarily represent those of BMO Global Asset Management.

The information, opinions estimates or forecasts contained in this document were obtained from sources reasonably believed to be reliable and are subject to change at any time.

Past performance should not be seen as an indication of future performance. The value of investments and the income derived from them can go down as well as up as a result of market or currency movements and investors may
not get back the original amount invested.

Our new Strategy aims to address a distinct gap in the UK housing market by offering high quality, sustainable, community based rental property, targeted at low to middle income households whose needs are not currently being met and where a real growth opportunity exists, given the UK housing market fundamentals. Investment will be governed by a robust social agenda, aligning with rigorous ESG and impact investment objectives which have already attracted highly regarded and discerning impact investors, including Big Society Capital. The Strategy’s ESG Impact Policy creates a strong governance structure to guarantee a product that satisfies occupier needs today and, in the future, while also prioritising environmental considerations and promoting sustainable living, ultimately creating thriving communities for the long term.

BMO REP will work alongside its development and operating partner, Home Group, to invest in purpose built, quality housing stock that improves the options to rent for working households and complements existing market participants (operators launching premium rental accommodation and social housing provided by Registered Providers and Local Authorities).

Home Group, which has been in existence for more than 80 years, is one of the UK’s largest providers of high-quality integrated housing, health and social care. BMO REP will act as Investment Advisor to the strategy, responsible for capital raising and governance, as well as the underwriting and purchase of appropriate sites and assets, forward funding any construction; Home Group will be responsible for sourcing sites with the appropriate planning consents, as well as forming part of the platform for the ongoing property management and leasing operations.

Angus Henderson, Head of Business Development at BMO REP said: “This strategy enables us to provide a much-needed housing solution to low and middle income earners while generating sustainable, inflation-linked long term income returns for investors. To achieve this, Home Group was very carefully selected as BMO REP’s development and operating partner thanks to its long term track record and deep seated experience in building and managing large scale housing solutions, with an emphasis on improving the private rented sector with a management responsible approach. We have identified a significant pipeline of short to medium term opportunities which we are hoping to imminently take advantage of.”

Mark Henderson, CEO, Home Group said: “As a country, we aren’t going to be able to build the homes we need without innovative approaches. A larger, professionally managed private rented sector will have a positive impact in driving up standards. Making private renting better is crucial to ensuring everyone has a safe and affordable home to live in. Expanding Home Group’s housing delivery model into the private rented sector through the relationship with the strategy and the utilisation of the ‘Flexible Rent’ leasing mechanism we are able to offer the sector the potential to provide more of the homes we need at an affordable level with funding coming from the private sector. It does not need government grant – yet can operate at scale.”

Anna Shiel, Head of Origination at Big Society Capital commented: “The current failings of the private rented sector are widely documented: unaffordable, poor quality, insecurity of tenure, to name only a few. There is an urgent need to address the undersupply of high quality, affordable private rented sector housing for those on low to average incomes who cannot afford to own their own homes.

“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 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.”

BMO REP has been investing in and managing UK property for over 50 years and currently manages £6.2 billion of property across Europe, including £850 million of residential property in the mature German rental market. It has a strong track record in creating and managing real estate portfolios that deliver long term sustainable income and are built from quality, long term investments underpinned by strong fundamentals.

Risk Disclaimer

The views and opinions expressed in this article by the author do not necessarily represent those of BMO Global Asset Management.

The information, opinions estimates or forecasts contained in this document were obtained from sources reasonably believed to be reliable and are subject to change at any time.

Past performance should not be seen as an indication of future performance. The value of investments and the income derived from them can go down as well as up as a result of market or currency movements and investors may
not get back the original amount invested.

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