Pension funds are being invited to join Birmingham City Council in a unique venture to build up to 1,500 homes for rent.
It’s envisaged that a Private Rented Sector Initiative, championed by cabinet housing member John Lines, will provide homes for people in the 25-35 age range who are priced out of the property market.
Under the scheme, the council will contribute land that it owns while the pension funds provide financial backing.
The homes will be owned equally by the local authority and the private sector backers.
Coun Lines (Con Bartley Green) has been at the forefront of a public sector housing revival in Birmingham, building the first council houses in three decades. More than 600 homes are under construction at the moment, and the council has committed to building 500 a year.
He believes the Private Rented Sector Initiative will overcome the depressed property market because pension funds will regard the venture as a long term investment.
Coun Lines said: “The housing market has become polarised between social and market homes, and for a large number of younger people access to these segments is nigh impossible.
“Pension Funds have capital for long term investment. Use of such funding could help support market homes, through creating long term market rent opportunities.
“Using such pension funds gives local authorities an option to maximise capital value of its land asset, influence the nature and shape of the future housing market, and an opportunity to start building homes where land is available.
“The model is based on the assumption that the new rented homes make an operating surplus which is then shared between the partners, according to the percentage of their contribution.
“The properties can be bought by the tenant or sold on the open market as housing demand and conditions change, in which case each partner again receives a share in proportion to its contribution.
“I believe, with the investment and availability we will attract the business people and professionals who work in the city to stay with their families.”