A plan to boost home building in Manchester has been agreed this week that will make new homes more affordable for Manchester residents.

Manchester City Council, in partnership with the Greater Manchester Pension Fund (GMPF) and the Homes and Communities Agency (HCA), has signed a memorandum of understanding that will bring together a completely new way of funding home building in the city.

Initially the scheme will be applied to five sites across the city, which will see more than 240 new homes built for sale or rent that are designed to a high standard and specification– providing a real choice of decent homes for people across the city.

Development land will be provided by the city council, including one site offered by the HCA, while the Greater Manchester Pension Fund will finance the building of the homes.

Together the partnership will choose a contractor to build the homes and a property manager to manage the rented properties – with the city council supporting the buyer by taking an equity share in the property, making the new homes more affordable and mortgage costs lower.

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It is hoped that buyers could get a home for 20 per cent less than the normal market level, providing a genuine route on to the property ladder for people struggling to afford to buy at the full rate.

The scheme relies on the fact that the city council can invest land, while a partner – in this case the Greater Manchester Pension Fund – invests the finance required to build the homes. The partnership chosen contractor will design and build the homes but without the risk associated with a normal development, as their overheads are minimised and they have no sales risk.

The partnership will generate a revenue return from their investment through rents and a capital return through house sales.

If successful the housing investment fund scheme could set a precedent for much bigger projects with other major investors – securing a bright and sustainable future for the Manchester housing market.

Cllr Jim Battle, Deputy Leader of Manchester City Council, said: "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."

(CD)