David Smith-Milne, managing director, Placefirst

1. Placefirst | PRS
fair value family homes for rent
David Smith-Milne
July2014

2. • Immediate plan is to build, own and operate a portfolio of 1,000 PRS units across the North of
England.
• Focus is on customers that find themselves in a growing gap between social or affordable housing
and home ownership.
• These are low income, working households
• We work in areas where low to middle income families, who are not benefit dependent, face few
choices other than “amateur landlords”.
• Not “affordable” housing, but it is high quality, well designed and energy efficient housing that is
accessible to people on low incomes – we call this “fair value housing”.
0ur strategic plan

3. • Closely tracking business models from around the World, including USA:
• Invitation (PE Backed)
• Waypoint (PE Backed)
• …private equity backed acquirers of distressed and / or foreclosed housing to create large
portfolios of “institutionally managed” single family rental homes for rent.
• 2 years of planning and site acquisition and perfecting the implementation model across a “buy, fix
and manage” business cycle.
• Currently on site with schemes valued at £25m of GDV. Targeting another £25m in next 12
months.
• Business plan targeting £100m of assets.
our strategic plan

4. placefirst development portfolio
Active project
Pipeline project
Chatsworth Gardens, Morecambe
• 91 units
Woodnook, Accrington
• 150+ units
Walton, Colne
• 27 units
Vine House, Seaforth
• 36 units
Carr Street, Hartlepool
• circa 100+ units
Compstall
• 121 units
Centenary House, North Lancs
• 15 units

5. why this market?
• Nationally the PRS serves 4 markets:
• those that cannot become homeowners because of their current life-cycle stage e.g. young
with insufficient savings, students – generally mobile
• those temporarily leaving owner occupation, because of say a job move or a divorce
• those that cannot afford owner occupation because of a sharp surges in house prices, as
occurred in the last housing market boom, or because of increases in deposit requirements,
as has occurred since the 2007/8 credit crunch
• those who cannot ever expect to be able to afford to become homeowners due to the level
and/or variability of income

6. why this market?
• Competition can be beaten:
• “mum and dad” investors and small portfolio builders; or
• Registered Providers / Housing Associations
• Both highly variable in terms of quality and neither operate with any brand.
• Some RPs tend not to act strategically, follow a “bid and deliver” regime, deliver variable quality
housing and are failing to rise to the challenges set by Government. Output is inconsistent and
highly tied to political imperatives.
• Relatively easy to build a product that competes strongly in these sectors in terms of property,
services, quality and security of tenure.
• Can produce attractive yields, contingent upon the land acquisition model.

7. • Customers are “low income, working households”.
• They are not housing benefit claimants
• They are generally quite young: 50% of this cohort nationally is under the age of 40 (just 10%
HB claimants under 25)
• They do not form part of your traditional “low income stereotype”: just 5% are lone parents
(32% HB claimants)
• They are well educated: 43% have degrees (47% HB claimants have no qualifications)
• These are people in work, with aspiration, well read and educated.
• They aspire for quality.
target demographic

10. • Our customer is a household with gross income between £25,000 and £40,000
• That household can support rent of between
• £482 PCM and
• £879 PCM
• …depending on %age of net income allocated to housing costs (e.g. 35%)
• These rental ranges allow us to spend between:
• £87k and
• £132k
• …on “all in” development costs to create an asset yielding 6%
financial model

11. • Branded housing for low income working families:
• Thoughtfully designed
• Aspirational
• Responsible landlord
• Excellent management & services
• Energy efficient
• Built at scale, enhances communities
• Rent that represents excellent value
0ur product

12. private renting just got a
whole lot better…

13. our affordable homes don’t
look like affordable homes

14. make your next rented
house a home…

18. features &measures
• Well insulated building envelope: ground floor, external & party
walls, roof
• U-values between 0.15 – 0.3
• LED lighting to kitchens and bathrooms
• A** rated gas combination boiler
• Refurbished homes at Woodnook will be 50-60% cheaper to run
• EPC Energy Efficiency Rating – from 21 to 78
• EPC CO2 Rating – from 21 to 81
• BREEAM Domestic Refurbishment Very Good
• As a builder and operator of rented homes, this offers
significant benefits to both landlord & tenant

20. • we never set out to deliver low carbon development
• we have sought to set a new standard in this sector (design, liveability, cost to end user)
• we know properties that are Built to Rent needed a different approach to Build To Sell
• keep utility bills as low as possible for our customers
• future proof homes against rising utility costs
• create a distinctive offer to attract families to Woodnook
• in challenging projects it is easy to default back to doing the minimum required
• sticking to your principles requires innovation in how you do things, strong partnerships that
encourage challenge and a managed approach to risk
final thoughts

21. placefirst