Rent to Buy – Storm Property

Storm Property is a property company that focuses on making a difference. We are specialists in the supported living and affordable housing sectors. Storm has very strong relationships with local authorities and national housebuilders, providing real opportunities for growth. Storm’s institutional financial backing enables affordable housing to be delivered quickly and in volume. This allows local authorities and registered providers to realise strategic priorities. By utilising Storm’s Rent to Buy model, local authorities can benefit from a significant increase in the number of homes available at affordable rents.

HOW IT WORKS

Storm Rent to Buy uses its own funds to purchase housing stock and rent them at an affordable rent to people that are already on the council’s housing waiting list. At the end of their tenancy the tenants are gifted 10% of the value of the house as a deposit to help them to purchase a home to get on the property ladder. This provides an opportunity for those who are currently excluded from home ownership to own their own home.

Storm Rent to Buy is a fully funded solution which requires no government funding. It also reduces council waiting lists while maintaining the level of affordable housing in the area.

OVERVIEW OF THE MODEL:

FUND

Storm has pre-agreed funding from large institutional investors to purchase.

DEVELOP

All homes developed to Storm Standards and building regulations.

LEASE

Storm will lease the properties to a registered provider (RP) for 20 years under a FRI lease.

LET

The RP will receive rent from the tenants set at an affordable level (80% of market rents).

SELL

Every 5 years, Storm sells 25% of properties from each development to the tenants. The tenant receives a cash deposit of 10% of open market value as a gift from Storm.

REPLACE

As tenants are purchasing their homes, Storm will use the funds to purchase new affordable homes to help meet demand.

BENEFITS FOR TENANTS

Interests of the tenants at the heart of what we do

Storm Rent to Buy incorporates both affordable rent and affordable home ownership and is therefore more appropriate for Key Workers than other forms of affordable tenures that they may also be eligible for. This is exemplified in the diagram below:

As the diagram above shows no other affordable tenure offers tenants both; the ability to save up over a period of 5-20 years and the ability to purchase a home at a discount to market. This is an important distinction as the main barrier to home ownership, in this era of record low interest rates, remains the ability to save for a deposit. Offering Key Workers access to discount market sale homes without providing them with the means to save for a deposit in advance will lead to low take-up rates among this target group. Storm’s Rent to Buy is the only affordable tenure type which both allows tenants’ the time to save for a deposit and gifts them an additional 10% of open market value towards their deposit. Larger deposits will allow buyers to access mortgages at the best available rates. In addition credit rating agencies, such as Experian, can now use tenant rental payments to build up credit scores which can help to improve a tenant’s creditworthiness.

The key benefits for a tenant are:

SUPPORTED

Storm supports and enables the tenants to move into their own home

WELL MANAGED

Properties are managed by Storm’s partner RPs. Unlike shared ownership there are no repairing obligations until the tenant purchases the property.

AFFORDABLE

Rents are set at an affordable level(80% of market rent).

SECURE

The tenant is on a 5-year renewable tenancy. On day 1, the tenant will decide whether they want to purchase their home at year 5, 10, 15 or 20.

GIFT

The tenants receive a gifted deposit 10% of OMV by Storm to help with their purchase.

OPTIONS

No requirement to purchase if the tenant changes their mind. Property could be purchased by the RP instead so they can continue to live there.

IMPROVE CREDIT

Chance to demonstrate creditworthiness through a five-year tenancy of rent payments to help mortgage application. A range of mortgage products and competitive interest rates available.

BENEFITS FOR PARTNER REGISTERED PROVIDERS

Allowing Registered Providers a chance to grow safely at no additional cost

Registered Providers that are either looking to expand their housing portfolios or expanding their choice of affordable housing tenure tend to partner with Storm. Storm’s Rent to Buy model alleviates council housing waiting lists without the need for additional borrowing.

Our Partner Registered Providers (RPs) work closely with tenants to provide regular rent payments therefore helping the tenant to boost their credit ratings. This in turn increases the likelihood of a successful mortgage application. Our model specifically searches for tenants with the will and ability to achieve financial independence by owning 100% of their own home. This increases a RPs tenant satisfaction levels as well as securing rent payments throughout the tenancy term.

Due to Storm’s institutional financial backing, the time-consuming procurement process associated with building new homes is eliminated for the RP. This provides a greater opportunity to grow safely whilst meeting the needs of the local authorities and the local community. In addition Storm will be actively bringing sites and opportunities to the Partner RP saving the RP site finder and due diligence fees. The number of leasing RPs is growing. This is because more and more RPs are realising the benefits of leasing stock rather than owning it. The benefits include not having large upfront payments to buy stock and having the flexibility to end leases when the stock becomes older. This allows the RP to always lease newer stock to improve both the tenant experience and keep maintenance costs low.

Other key benefits for registered providers:

Organically grow without borrowing or subsidy.

Achieve economies of scale.

Gain efficiencies through consolidation of operational costs.

Option to buy with 10% discount.

HCA compliant product.

Revenue opportunities for registered providers:
Storm will pay registered providers:

Retained rent of 25%.

Project management fees for managing developments.

Introductory fees on new sites.

BENEFITS FOR LOCAL AUTHORITIES

Providing a constant supply of new affordable homes while simultaneously reducing the council’s housing waiting list.

Across the UK the difficulty for many local authorities is retaining staff for key frontline services such as healthcare, policing and education. This is due to rising house prices. Providing low cost housing is one of the ways that Key Workers can be encouraged to stay in an area. Many Key Worker schemes are around low cost rent or discounted home ownership but very few combine both like Storm’s Rent to Buy. Products like this are rare and so offer the opportunity for the local authority to market themselves as the ideal location for Key Workers to live and work. This will help to retain a local frontline workforce.

Storm’s institutional financial backing enables affordable housing can be delivered quickly and in volume. This allows local authorities to realise strategic housing priorities. By utilising Storm’s Rent to Buy model, local authorities can benefit from a significant increase in the number of homes available at affordable rents.

The Local Authority will consider the needs of their community and then determine who the Storm Rent to Buy homes are allocated to, helping remove tenants from the council’s housing waiting lists.

Storm will work in partnership with the local authority to best meet their needs. Any affordable properties that are sold through the Storm Rent to Buy model will be replaced by Storm, therefore maintaining a constant supply of new affordable homes while simultaneously reducing the council’s housing waiting list.

Other key benefits for local authorities: