UK - European pension funds who would not traditionally invest in UK rental housing may do so for the first time through an initiative to kick start investment in UK private residential property, according to a UK government body.

The Homes and Communities Agency (HCA) said it has now received 64 ‘expressions of interest' in its Private Rental Sector Initiative (PRSI), which is designed to encourage institutional investors to build, own and maintain privately-rented homes as well as take on stalled development projects, and deliver the much-needed large-scale housing target the UK government is seeking to achieve.

"Household name" UK and overseas pension funds are said to be among the parties who have put forward proposals for the possibility of investing in projects, alongside property developers, fund managers, housing associations and property managers, and those proposals are now being reviewed by its consultants, DTZ, to try and create investment propositions.

The project was only first aired in May this year but Bob Kerslake, chief executive of the HCA, said its early testing has been confirmed so momentum will be kept now by identifying possible investment projects along with deliverability of both funding, returns and property developments. (See earlier IPE Real Estate story: UK seeks pension fund invetment in housing)

"We are still in the early stages of this initiative, but interest has been encouraging ad shows the potential it has to ease some of the effects of the market downturn on developers and turn private rental into an option of choice for consumers in the future," he said.

Several proposals are said to have been submitted as consortia, according to Kerslake, and "a number' were from outside the UK.

In order to consider whether parties are eligible to be involved, HCA and DTZ will now assess each organisation's financial strength and standing, resources and relevant experience, as well as ability to invest or raise third-party capital, track record of creating new investment funds and "willingness to be flexible and innovative".

But by the end of the assessment period, there are likely to be several funds bringing together investors and through more than one fund partner, according to the HCA.

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