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A new building business model is being trialled in Manchester in the north west of England. The scheme aims to build more 240 new homes, but rather than the traditional model whereby a developer will purchase land, then build and sell homes, the land will be provided by Manchester City Council (MCC) and the Homes and Communities Agency (HCA), with the necessary funds to build the homes provided by the Greater Manchester Pension Fund (GMPF). This partnership will then select a developer to build the properties, and an additional company to manage the rental properties, the returns on this model being generated through a combination of rental income and capital returns through house sales. The scheme is based on both the Manchester City Council and the Homes and Communities Agency being able to invest land suitable for domestic property development with the Greater Manchester Pension Fund providing the necessary financial investment to fund the building works. By taking a share in the equity of the homes for sale, the city council hopes that buyers would be able to purchase the properties for 20% less than the full rate, providing assistance to those struggling to raise the necessary deposits to buy at the full current market value. It should prove a very attractive model for builders, as it significantly reduces their overhead investment in any given project, and they have no sales risk once the development has been completed. This should help to stimulate the construction sector and create both more jobs and a much needed increase to available housing stock in the Greater Manchester area. Councillor Jim Battle, Deputy Leader of Manchester City Council, is quoted as saying: "Manchester’s growing population and forecasted economic growth will mean we will continue to need more homes in the near future. The economic climate has severely slowed home building in recent years and levels of development are not keeping up with the city’s demand. This new innovative model tackles these issues, pushing forward development opportunities while ensuring a supply of new attractive homes are available to residents at affordable prices." While Councillor Kieran Quinn, Chair of Greater Manchester Pension Fund, adds: "I’m proud that we are able to use the pension fund to invest in the building of much needed homes in Greater Manchester whilst securing a good return to fund the pensions of the workforce." Should this scheme prove successful, there are plans to increase new homes development using this business model on a much larger scale.
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