We had a great turnout on Thursday morning for the Lending for
the Private Rented Sector (PRS) seminar at our London offices. We
had over 60 external attendees, with clients from
RBS, Savills, Barclays, Capita Asset Services, Lloyds
Banking Group, and Wells Fargo. Presenters
included Francisca Sepulveda of Reed Smith, George
Cotterell of Venn Partners, Gareth Blacker of the Homes and
Communities Agency (HCA), Sharon Quinlan of Barclays, and Tom
Stenhouse of Patrizia UK.
Discussion centred on the healthy interest in the PRS market
from established developers as well as new entrants to the market;
with some commercial developers showing interest in this sector. It
was discussed how lenders do remain cautious due to scarce historic
information available to fully understand the risks; particularly
in the transition phase between PC and a site being fully or
near-fully let. In addition, the length of development time for a
PRS scheme is a barrier to a number of lenders in the market. To
combat these risks, quality sites, developers and investors with a
track record are crucial.
HCA spoke about how they provide a flexible package of
assistance for infrastructure development; ranging from the letter
of comfort scheme, operated by Venn Partners, to providing
mezzanine and infrastructure finance. It was noted that HCA
mezzanine finance is not intended to compete against the mezzanine
lenders in the market, but rather assist where the mezzanine slice
would not reach a high enough yield (among other factors). Once
fully or near-fully let, a PRS facility operates in the same way as
the other residential deals that lenders have been acquainted with
for some time.
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The recent County Court decision in Camelot Property Management Limited (1) and Camelot Guardian Management Limited (2) v. Greg Roynon is an uncomfortable reminder to landowners of how easy it is to inadvertently grant a tenancy when only a licence was intended. The consequences of getting it wrong can be time consuming and costly.
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