The ‘Racing Bond’ - provision of affordable housing to support rural employers Rural Housing Advisory Group 23 January 2014

Contents 1.Identifying the need 2.The solution - four elements 3.Legal agreements 4.Issues

1. Identifying the need

Donoughue report 2004 Low cost accommodation major problem for employers Less tied accommodation Only 5% staff access local social housing Low wages and mobility limit options

British Horseracing Board Survey 2005 (of 228 Employers)

Looking for a new solution Donoughue: ‘the BHB should work with employers to develop a blueprint to improve the supply of affordable accommodation’ and in particular address ‘ways of financing and building new affordable accommodation’

2. A solution

Four elements Finance Land Supply Housing development Management and maintenance Housing association Racing industry

Financials – achieving affordability Three options: Low cost land Sale of nomination rights Bond capital with a ‘social rate’ of return for investors Possible fourth source: Homes and Communities Agency grant funding

Land supply From within industry Rural exception sites Long leasing of land Minimum 60 years Reversion includes high quality property £1,500 income per acre pa Nil capital sum to developer

Nomination Rights For term of lease Assignable and mortgageable Housing association manages and allocates Assured shorthold tenancies Racing Welfare acting as broker and bulk purchaser Estimated cost £30,000 per nomination right

The Bond Terms Private placement First issue - £5 million (500 homes) Minimum investment £20, % pa fixed return, emphasis on social benefits 10 year term (Hastoe purchase of forward fix) Terms to restrict housing for racing employees Asset security from Hastoe Investors: Anchor £2.5 million (Levy Board) Other investors: Trusts, individuals, racing bodies

3. Legal agreements

Racing Welfare Sale/ purchase noms RW on sell nom rights to employers Land owner Long lease Trust Deed of trust Deed of charge Bondholders Employee Tenancy agreement Contracts Bond Co

4. Issues

Issues New form of tied accommodation? Local authorities and views of their nomination rights on exception sites Components of solution already in industry Any major rural employer? Too complicated?