The Ministry of Housing, Communities & Local Government (MHCLG) has announced changes to the Private Rented Sector Housing Guarantee Scheme.

They can be seen here, and in summary:

Private Rented Sector Guarantee Scheme (PRSGS) Overview

The PRSGS provides loans for new-build or converted private rented homes in the UK.

1. Eligibility & Project Requirements

• Loans support private rental housing development or conversion.
• Minimum project value: £10 million (can be multiple sites).
• Properties must remain private rentals for the loan period.
• Borrowers must be classified as private sector or a Private Registered Provider.
• Properties must be in the UK.

2. Financial Structure

• Loan-to-equity ratio: Maximum 80/20.
• Net rental income to interest cover ratio: Minimum 1.1:1.

3. Security & Recourse

• First fixed charge over project assets and rents.
• Loan limited to 80% of property value, with valuations required.
• Security release allowed if asset cover exceeds 200%.

4. Fees & Costs

• Borrowers cover guarantee arrangement costs.
• Administration fees apply.

5. Covenants & Reporting

• Maintenance of loan-to-value and interest cover ratios.
• Regular financial and property performance reports.

6. Application Process

• Applications undergo full due diligence.
• No guarantee offer implied by scheme rules.

FAQs

• Deadline: Applications accepted until 28 Feb 2028.
• Loan Term: Up to 30 years.
• Funding Region: Available in England, Wales, Scotland, and Northern Ireland.
• Eligible Projects: New builds and conversions (excluding specialist supported housing).
• Funding Timing: Post-construction or when partially/fully leased.
• Developer-Investors: Equity must come from profits or other sources.
• Costs: Application fee ranges from £5,000 to £25,000.
• Early Loan Repayment: May incur pre-payment costs.
• Reserve Accounts Required: Interest, capital expenditure, and sinking fund reserves.

For applications, contact PRS Operations Ltd (Venn Partners LLP) at prs@venn-partners.com.