A hedge fund’s plans to build 400 low rent homes in Luton are worth around £60m for the town, we can reveal.
Cheyne Capital is set to bring forward plans for a large scale development on land off Newlands Road, north of Luton Rugby Club – a site which already has outline planning permission for 394 one and two bedroom flats with a different developer.
However Cheyne is looking to build 400 homes on the site – 20% of which will be available on affordable rent and the remainder will be set on rents linked to local housing allowance levels.
Should planning permission be obtained Luton Borough Council will manage the homes and will have full nomination rights over who is allocated to live in them.
This agreement between Cheyne and LBC will initially last 20 years, but could be extended far beyond this.
In return Cheyne is expected to take an annual yield of around 3%.
LBC’s housing portfolio holder, Cllr Tom Shaw, told the Luton News that the scheme will cut the amount of people on the council’s mammoth waiting list for housing.
Cllr Shaw said: “They (Cheyne) are not interested in making a quick buck and what they are looking for is long term investments.
“The full application should be going to the planning committee in July, the target is to get started on work on the site in August.”
Terms of the deal will allow the council to circumvent the government’s Right to Buy scheme, Cllr Shaw added.
The planned development is similar to a deal LBC has with Cheyne for 80 affordable housing apartments on the old Drill Hall site in Hightown, which are expected to be completed in September.
Representatives of LBC and Cheyne first met at a conference two years ago and since then the council’s auditors have worked through the numbers to see if the hedge fund’s plans stack up.
Cheyne has said that its national fund for social housing is in excess of £850m.