BusinessPlan - nicheprs.files.wordpress.com · either in one property, or in close proximity to each other, located in urban areas. Establish self supporting micro communities within

Business

NNICHE PRS

BRIDGING THE GAP

www.nicheprs.com

Proposal Issued:05.06.18

Plan

PREVENTING HOMELESSNESS FOR SINGLE PEOPLE

BCR Benefit Costs Ratio

CBA Cost Benefit Analysis

CBM Community and Building Manager

CCG Clinical Commissioning Groups

CJS Criminal Justice System

DCLG Department for Communities and Local Government

DToC Delayed Transfer of Care

DWP Department of Works and Pensions

ESA Employment Support Allowance

GDV Gross Development Value

HA Housing Association

HAC Homelessness Advice Centre

HB Housing Benefit

HRA Homelessness Reduction Act 2017

HRB Homeless Reduction Bill

IB Incapacity Benefit

JSA Job Seekers Allowance

KPI Key Performance Indicator

LA Local Authorities in England

LGA Local Government Association

LHA Local Housing Allowance

LTV Loan to Value

NPV Net Present Value

PRS Private Rented Sector

ROI Return on Investment

SCM Senior Community Manager

SPH Single Person Household

USP Unique Selling Point

ABBREVIATIONS

4 business plan: niche prs

nb: all footnotes can be found listed on p.38

FOREWORD

NNICHE PRS

BRIDGING THE GAP

An integrated portfolio of affordable rented homes in blocks of 35-120 units per community

either in one property, or in close proximity to each other, located in urban areas.

Establish self supporting micro communities within the tenant group of each property so

people finding themselves living alone can thrive financially, socially and emotionally.

To have a viable and sustainable rental income across the portfolio to reward risk and effort.

To ensure a stable capital value with growth across a portfolio of 500 units plus, based on

yield, supported by 95%+ occupancy, best practice and efficient management operations.

Its not a house, but a home that changes lives.#bridging the gap quote from Niche PRS 1 tenant

Niche PRS 1

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Niche PRS are looking to expand their existing and successful, socially innovative affordable

housing model for single person households ('SPH') to achieve the 4 following objectives.

5bridging the gap: preventing homelessness for single people


CONTENTSFOREWORD 4

THE NEED - AFFORDABLE HOMES FOR THOSE LIVING ALONE 7

THE OPPORTUNITY 8

THE SOLUTION 9

HOW THE NICHE PRS SOCIAL ENTERPRISE MODEL WORKS 10

SUPPORT AND FUNDING REQUIRED 11

SOCIAL IMPACT & VALUE 12

FINANCIAL BENEFITS TO THE LA & COMMISSIONING GROUPS 14

FACT OR FICTION - MANAGING SINGLE PERSON HOUSEHOLDS 16

FINANCIAL RISK AND REWARD 18

KEY FINANCIAL INDICATORS 19

THE STRATEGIC PRIORITIES 20

KEY PERFORMANCE INDICATORS 21

FUNDING OPTIONS & RETURNS 22

COST BENEFIT ANALYSIS 24

TARGET LOCATIONS & PROPERTIES 26

GROWTH OBJECTIVES 27

DEVELOPMENT TIMELINE 28

MANAGEMENT STRUCTURE & TENANT SOURCING 30

SENIOR MANAGEMENT 32

MARKET OVERVIEW - SINGLE PERSON HOUSEHOLDS 33

MARKET COMPETITION AND COMPETITIVE ADVANTAGE 35

AFTERWORD 36

EXTRA INFORMATION AVAILABLE ON REQUEST 37

FOOTNOTES AND SOURCE DOCUMENTS 38



THE NEED



It is no secret that the UK faces a significant problem

with affordable housing, but what is often less seen

is that the acute lack of affordable housing is most

keenly felt by those, who until recently, had no legal

entitlement to accommodation. In England, these

are single people who are living alone, the single

person household ('SPH'), unless such a person is

deemed 'vulnerable'. Being classed as 'vulnerable'

is a high threshold to cross and very few SPHs are

deemed sufficiently in need, despite being in very

unfavourable situations. Being homeless does not

necessarily qualify you as 'vulnerable' by the official

definition.

While single homelessness figures are widely available,

finding a concesus is harder to tie down. In the year

2014 – 2015, official DCLG figures recorded 940 single

homeless people in London,1 CHAIN for the Select

Committee on Homelessness, recorded 75812 in

London and Crisis estimates there are 2.35m hidden

homeless single people – living rough, in hostels or

sofa surfing across the UK.3 The rise in solo living has

been one of the most important demographic shifts

of recent decades. By 2033 it is predicted that nearly

1 in 5 of us will be living alone.4 This is an increase of

159,000 households per annum.5

With the Homeless Reduction Bill (‘HRB’) now passed

into law, Local Authorities ('LAs') in England now have

new obligations to SPHs at risk of homelessness:

The key measure in the Homelessness Reduction

Act 2017 (HRA) for those threatened with

homelessness is prevention. Prevention brings down

both the cost of human misery and the cost to the

state in hard cash. Reports from Crisis indicate that

public spending could fall by around £370 million

in England if 40,000 people were prevented from

homelessness for just one year.7

The Government has set aside £61m for Local

Authorities ('LAs') for the first 2 years of their new

obligations, hoping that related savings by preventing

homelessness will negate the need for further

funding.8

(1) To offer free advice on how to resolve their

homelessness or threat of homelessness and

(2) To produce a written plan for each and every

person (eligible to live in the UK) who seeks this

advice and

(3) Take reasonable steps to help that person to

secure suitable accommodation for 6 months or a

longer period not exceeding 12 months.6

AFFORDABLE HOMES FOR THOSE LIVING ALONE



The opportunity, is to provide a genuinely affordable and if required longterm home for

SPHs within the Private Rented Sector ('PRS'). The solution proposed in this document will

not only satisfy the legal obligation of the LA to prevent homelessness, but offers direct

savings to the LA on social care, NHS and Criminal Justice System ('CJS') costs, and can

provide an annual return to stakeholders.

As Niche PRS produces significant social care cost savings for LAs, Niche PRS has identified

the opportunity to demonstrate 'best value' to these same LAs and secure well located and

suitable properties in partnership or by direct purchase/long lease from them. In support of

this approach, and aligned with satisfying the obligations in the HRB, is the DCLG's Local

Authority Assets: Disposal Guidance (March 2016) which sets out the requirement of LAs

to release surplus assets for housing and/or services.9

The Report on ‘Affordable Homes from Empty Commercial Spaces’ published by Empty

Homes 2016 commisioned by the Government has as its first recommendation addressed

to LAs:

'to develop and adopt an empty commercial spaces strategy to include the action you

will take to create and stimulate affordable housing within long term empty spaces. Be

clear on the role of different departments and allocate resources to deliver it. Consult

and involve local people and organisations in this. Allocate a councilor to champion

the strategy.'11

The opportunity therefore is to provide a private sector win-win-win solution to LAs and the

wider public, whilst making sound business sense and providing a return to the business

owners and their stakeholders. 'The Solution' sets out the plan to use redundant offices and

other municipal buildings that have potential for permitted development rights for re-use

as a Niche PRS property, and thereby de-risking the necessary planning applications.

It is undeniably that sourcing a place to live for someone faced with homelessness is essential, however for

SPHs without that home being affordable, long term and without being part of a supportive community,

the underlying triggers that contributed to that individual not being able to access the mainstream PRS

market are much less likely to be successfully and sustainably addressed.

Crisis's Report - Homelessness and Loneliness 'the want of conviviality' (2000), eloquently sets out the

intangible yet essential need for mankind to be part of a community, and to ignore this element is to doom

any intervention in homeless prevention to eventual failure.11

THE OPPORTUNITY

WIN-WIN-WIN SOLUTION



To replicate the socially advanced Niche PRS model of providing affordable housing for

SPHs which has been successfully, quietly and profitably running for 18 years. The business

and management ethos has been carefully evolved over this time to deliver an integrated

range of social impact outcomes and strong financial returns, running as it does with 100%

occupancy, a long waiting list, extremely minimal bad debt and a very low proportion of

slow debt. The model going forward will initially develop vacant commercial or residential

buildings into the Niche PRS model of affordable housing, later developing new build

opportunities as the portfolio grows. The model already addresses many key demands of

the recent Government White Paper on Housing12 and also the obligations contained in

the HRA 2017.

Preventing homelessness is not just finding someone a roof over their head. It is

supporting them in terms of work, budgeting, improved life style choices and bringing

a sense of community and value into someone's life.

Just putting a SPH, who is homeless or at risk of homelessness, into accommodation is

certainly an improvement in that person's situation. However, this accommodation-only-

solution, maybe an exercise that only reduces the problem from a statistical viewpoint and

achieves very little to resolve the underlying problems for the individual or the knock on

cost to the state when, inevitably, that limited intervention fails.

SAVING MONEY ON SOCIAL CARE

REVENUE STREAM FOR STAKEHOLDERS

PREVENTING HOMELESSNESS

Niche PRS's model works by not

only providing accommodation

but by creating a community. It

is this sense of belonging and

companionship offered by the

community and supported by

the CBM that accumulates the 6

figure direct annual savings for

LAs and other commissioning

partners and ascertainable Public

Value from each property.

The Niche PRS model is flexible

enough to facilitate either

purchasing a property at a

'best value' price, long leasing

or partnering with the the

property owner. Dependent on

stakeholder interests and funding

arrangements, a revenue derived

from the retained rent is also

generated by Niche PRS model to

share with its stakeholders.

Prevention is far more cost

effective and successful than

Homelessness Relief. Niche PRS

offers direct lettings with rent

based on LHA rates - meaning

illness, part time work or work

uncertainly is no barrier to entry.

Our Community and Building

Managers ('CBM') are on site

and working daily to make their

community a success.

THE SOLUTION



Niche PRS differentiates itself from Housing

Associations ('HA') and market PRS by being focused

on targeting SPHs (the fastest growing demographic

in the UK), and that we create an on-site supportive

community, leveraging the power of peer persuasion

to generate the social impact. HAs do not prioritise

SPHs unless they are catorgorised as 'vulnerable', and

such a label in the past has been assigned reservedly

at best, and is often a tool for statistical 'gatekeeping'.

When a 'vulnerable' SPH is given a roof over their

head by a HA, they are more often than not, housed

in a place surrounded by families or couples, and

when placed in market PRS housing they are next to

people with a much higher disposable income - both

situations often increasing a SPH's sense of isolation.

Niche PRS is actively directed at those who live

alone and will aways need to make their home in a

modest rented property. We do not seek higher and

higher rents like market PRS models. We structure

an annual rent increase based on CPI and taking into

account the real meaning of what is affordable for

the tenants. Our ex-tenants who have left because of

rent arrears voluntarily come in every week with £1 or

£2 to pay off the debt, as they value the continuing

association with a group of people who they know

and respect. This is one of the aspects that makes us

unique. We are very happy to discuss our other USP's

with interested parties.

WHAT MAKES US DIFFERENT TO HOUSING ASSOCIATIONS AND THE MARKET PRS?

The model has 2 essential elements.

(1) We offer furnished or semi-furnished

(tenant can choose) 1 bed units. Each property

also has central and open communal areas and

facilities.

(2) The Community and Building Manager

('CBM') lives on site and their office is positioned at

the entrance to the property for regular interaction

with the tenants, and for tenant security. The day-

to-day social support, the personal management

style and expertise, our USPs, and the

encouragement of tenant integration all provide

an inspiring, self policing, self supportive micro

community for the tenants who enjoy a Niche

PRS home today.

HOW THE NICHE PRS SOCIAL ENTERPRISE MODEL WORKS



As a standalone commercial model the original Niche PRS 1 property started in 1998.

The property now comprises of 74 flats and 6 commercial units in one block. The

model has flourished and brought stable commercial returns to its owners whilst also

delivering affordable homes with an equally significant and recognised social impact to

it tenants. It has been able to achieve this as it was bought and converted with personal

equity many years before PRS was seen as a ‘sensible’ investment. The competition in

1998 to purchase a fairly derelict property, needing refurbishment, and change of use

planning permission was not as competitive as it is now. As such, capital costs were not

inflated as they would be today, by developers who can make money by developing to

sell or developing to rent at market rents.

For the Niche PRS model to be able to compete in the marketplace today the need is

threefold:

SECURING THE PROPERTY

Property owners and/or investors

have to understand the benefits

of ‘best value’ over ‘best price’. The

new obligations on LAs to assist

SPHs at risk of homelessness, will

be fulfilled in the long term when

people can afford a secure home,

can address the triggers that

created the risk in the first place,

and the consequential social care,

NHS, CJS and other savings can be

retained in the relevant budgets.

DEVELOPMENT FUNDING

Niche PRS will seek development

finance (ideally a revolving fund)

of £3-7m per property. This fund

can be refinanced on occupancy

by long term debt that Niche PRS

has secured in principle (65% LTV).

The lower the cost of funding is

the more Niche PRS can leverage

towards securing the property

and the more net income that

will be available to reward a 'best

value' approach.

CONVERSION COSTS

To ensure purchase/development

cost versus Gross Development

Value ('GDV') of each building

remains viable, Niche PRS will

seek conversion costs within the

lower spectrum. Niche PRS have

had preliminary talks with 'Build-

It' who work with apprentices/

young people with the support

of main contractors. Build-it offer

build costs up to 30% lower than

the main market.

FINANCIAL HISTORY OF THE FIRST NICHE PRS

SUPPORT AND FUNDING



LONELINESSThis is widespread among older people and people with limited income living alone. Mounting

evidence shows loneliness has a serious impact on our mental and physical health – which in

turn can lead to greater reliance on health and social care services – making it an issue the nation

can ill-afford to ignore.15 The Age UK report (2015) raises concerns that the issue within the older

population is becoming a major public health challenge.16 Recent research shows loneliness

can be as harmful as smoking 15 cigarettes a day and increases the risk of conditions including

dementia, high blood pressure and depression.17 Living within the Niche PRS community avoids

isolation and feelings of loneliness.

The Social Impact of the Niche PRS model broadly covers 6 key areas, however Niche PRS also supports

its tenants in many other, 'uncounted' areas. These 'uncounted' social impacts, such as providing help

with CV's, computer up-skilling and social bridging support is harder to quantify financially but is no less

valuable to the tenant and still equates to savings to LA and other state budgets, with a consequential

increase in public value.

(In assessing the Social Impact and Public Value, Niche PRS has based the analysis on the current

Niche PRS 1 tenant profile data using methodology guidance and data from H M Treasury.13)

HOMELESSNESS PREVENTIONThe ongoing annual costs of persistent homelessness far exceed the one-off costs of successful

prevention and the provision of appropriate affordable housing.14 There is therefore, a compelling

social enterprise case for any LA or Social Impact Investor to support and commission services that

provide proven successful early interventions alongside secure and sustainable accommodation

such as that provided by Niche PRS.

DELAYING CARE HOME ADMISSIONSOlder people who live alone without regular family support or caring neighbours will require daily

or twice daily visits from carers or to be homed in a care home as soon as they start to neglect

themselves or fail to be self sufficient. The cost of such social care is a rising financial burden on

the state as people are living longer. Many elderly people will not have the funds to self fund a

care home placement, where the UK average cost is £27,000 per annum,18 with much higher

costs in the South of England. These people therefore have to rely on the state for this care. Niche

PRS is a housing model which makes it possible for people to stay in their homes for longer and

accumulates annual and substantial savings to the LAs' social care budget. Within the Niche PRS

model most of our older tenants remain happily in their home for a much longer period than if

they were isolated without the community care and support we engender and sustain.

SOCIAL IMPACT & PUBLIC VALUE



LIFESTYLE RELATED ILLNESSESThe cost to the NHS for lifestyle related illnesses is currently £11bn per year.19 The astounding rates

of increase in type-2 diabetes and smoking-related bronchitis are reaching epidemic numbers

and will soon be financially untreatable due to the cost burden on the NHS. Other lifestyle-

related diseases, including heart disease, various cancers, osteoporosis and arthritis are linked

to poor diet, lack of exercise, smoking and drinking. Whilst the overall health forecast is gloomy

enough, the picture is particularly so in areas of high unemployment and poverty. Niche PRS

village style living encourages a less sedentary and healthier lifestyle by encouraging bridging

relationships and giving day to day support to allow people to feel brave enough to change bad

habits and provide slow and steady improvements in lifestyle over the long term.

MENTAL HEALTHRecent analysis commissioned by NHS England found that the national cost of dedicated mental

health support and services in England totals £34 billion each year,20 excluding dementia and

substance use. Almost 42% of this figure is associated with the value of unpaid carers21 – Niche

PRS 1 currently has 5 tenants who are informal carers for other tenants, saving the LA £18,000p.a.

per carer.22 Research shows that as the stability of housing increases then the rates of serious

mental health decreases23 and this saves the state and Clinical Commissioning Groups ('CCGs')

money day in and day out.

IT TRAINING SESSIONS

REDUCED LONELINESS

STARTED WEEKLY FITNESS

A FEW OF THE 'UNCOUNTED' SOCIAL IMPACTS IN 2016

PAYING OFF OTHER DEBTS

FIRST TIME VOLUNTEERS

FAMILY TIES STRENGTHENED

42 61 4

30 7 15All provided within the building and free of charge

DEBT MANAGEMENTHaving debt which increases as a result of day to day living expenses or cannot be paid off

with ease causes stress and anxiety. This stress and anxiety often puts a greater demand on

mental health services, CCGs and the NHS. The Niche PRS environment stimulates and builds

up emotional resilience within the community so that tenants are more able to cope with the

stresses that life and its financial demands can present. With its USPs, and rents that peg LHA

rates, utility costs and rent arrears are debts that can be avoided or managed by the tenant. With

help from the CBM, the tenant can, if work slows or dries up, apply for HB, ESA or JSA. Such an

opportunity prevents debt and potentially prevents homelessness for that individual.



Niche PRS has commissioned an independent social impact report for Niche PRS 1.24 The report uses the

same tenant data as used in this business plan, however the report uses different methodologies and sources

of cost data for calculating the social impact accrued by the business. The reports conclusion estimates the

total direct savings to the LA of approx. £500,000 and a Public Value of approx. £1.4m. The full report is

available by request, see Extra Information (p37)

A COMMISSIONED INDEPENDENT SOCIAL IMPACT REPORT

PREVENTING HOMELESSNESS

DELAYING CARE HOME ADMISSIONS

NHS SAVINGS

OTHER

The potential savings to other LAs will vary dependent on tenant mix

Niche PRS calculates that Niche PRS 1 currently

saves the LA more than £330,000 per annum for

the 81 tenants it homes.

The total value of the Public Value has been

calculated using the HM Treasury methodology at

£655,000 per annum.

£ 133,000

£ 192,000

£ 71,458

£ 77,702

FINANCIAL BENEFITS TO THE LA & COMMISSIONING GROUPSGiven Niche PRS's engaged community model, wider

social and health benefits can be achieved over and

above preventing homelessness by providing only

a roof and 4 walls. Niche PRS management plays a

key role for tenants in supporting individuals through

periods of recovery, as well as ensuring the right

environment to prevent certain social, physical and

mental health issues developing or worsening. Niche

PRS directly tackles many related issues for tenants

by providing good quality housing, removing people

from abusive/dangerous situations, creating bridging

relationships amongst tenants, organising and

encouraging social engagement, supporting tenants

with debt management issues, and enabling them

to find employment once again. This provides not

only savings to state costs but also a happier building

which eases management strains and allows more

time for general community support rather than the

need for 'fighting fires' which might be the case in a

less well managed environment.

KEY ANNUAL SAVINGS



REDUCING NHS COSTSWhilst the average cost per hospital bed per day is £400,26 the average cost per hospital

admission is £2,760.27 Niche PRS can provide a high level of support for the long-term non-

clinical care needs of its tenants which avoids unnecessary hospital in patient care. Similarly,

as most cases of delayed transfer of care ('DToC') are caused by inappropriate or absence of

any home-based care, prevalent amongst SPHs, Niche PRS with its village style community

prevents expensive and avoidable bed blocking.

14m GP appointments are missed each year, costing £300m;28 4.7m hospital appointments

are also missed, costing £750m.29 Niche PRS provides an opportunity for dates and times of

appointments to go in the ‘office’ diary so the CBM can remind, encourage or provide support

and assistance for tenants to attend.

OTHERThe costs to the LAs, the Criminal Justice System ('CJS') and the NHS of incidents of domestic

violence, crime and antisocial behaviour is over £9b per annum.30 By providing a Niche PRS

home to a SPH, where there is an established set of ‘house rules’ and with the management's

USPs, confrontation is diffused or avoided, and the community creates an attitude of nil

tolerance for any abusive behaviour. Within Niche PRS there are tenants who are living safely,

now freed from domestic abuse, and other tenants with a history of anti-social behaviour or

crime who are now not only living legitimate lives, but contributing to the local community.

PREVENTING HOMELESSNESSNiche PRS rent is set at LHA rates in any specific area. Therefore, if you lose work, or go on

reduced hours, you do not lose your house, face eviction or build up debt. Niche PRS will,

in discussion with the tenant create a debt repayment plan if arrears do occur and help the

tenant apply for HB until the tenant is back on his/her feet. In other PRS blocks this flexibility

is not offered because payment of HB will incur a 6 week delay in the payment of the back

dated rent. Niche PRS will bridge this delay in revenue, (as it is only a slow debt and not a

bad debt) and relieve tenant stress in the interim. In many PRS schemes, with an off-site

computerised approach, this delay is enough to warrant the start of eviction proceedings -

often the start of a downward spiral for many less well-off SPHs.

DELAYING CARE HOME ADMISSIONSMany elderly people especially living alone often see no one for days. This turns loneliness into

depression with an onset of self neglect. Social Services often have no choice but to move

these people to a care home at an average cost of £897 in the South East a week.25 When

there are signs of the onset of dementia the cost can be much higher. Niche PRS tenants

stay in their own home for far longer than a similar isolated individual could because of the

community environment. Neighbours often become the unofficial carers for other elderly

tenants and with the CBM keeping an eye on them, people are able to stay in their home for

months and even years longer. Staying with Niche PRS saves 87% of these care home costs, a

saving to the LA in excess of £40,000 per annum per person for Niche PRS 1.



FACT OR FICTION - MANAGING SPHS

Niche PRS has been operating in a market segment (affordable housing) and focuses on a demographic

(SPHs) that most asset managers would be fearful of managing because of the many beliefs held by the

industry. These beliefs hold the less well-off single person household, and certainly a whole property tenanted

by this group as being incredibly labour intensive and time consuming. A property full of problematic tenants

with much higher rates of building damage, anti social behaviour and unpaid rents. For these and many more

reasons most asset managers would be apprehensive, and probably determine, that managing such an asset

would produce little or no profit for the risk and effort involved.

Niche PRS however after 18 years experience knows better, and see these long-held beliefs as leaving

investors blind to the existing opportunities in the market The Single Person Household is the fastest

growing demographic in the UK, by 2033 it is predicted that nearly 1 in 5 of us will be living alone.4

Niche PRS has developed strategies and management techniques that unlock the keys to managing this

demographic, and in fact have turned the existing fears and problems regarding this group of tenants into

positives that work for the business. Niche PRS creates exceptional loyalty and responsibility towards the

property, the CBMs and between tenant to tenant. In a nutshell, Niche PRS has the approach to be personal,

to really know the tenant, not just when they move in, but throughout their whole tenancy and addresses any

issues early, before mole hills become mountains.

Maslow’s Hierarchy of Needs

model and its key principles

illustrate concisely how Niche

PRS readily meets the basic

needs, psychological needs and

supports the self-fulfillment

needs of every tenant.

SELF-FULFILLMENT NEEDS

PSYCHOLOGICALNEEDS

BASIC NEEDS

SELF-ACTUALISATION:

Achieving one's full potential, including creative activities

ESTEEM NEEDS:prestige and feeling of accomplishment

BELONGINGNESS AND LOVE NEEDS:intimate relationships, friends

SAFETY NEEDS:security, safety

PHYSIOLOGICAL NEEDS:food, water, warmth, rest



Mr C Date of Arrival: 28.04.12Mr C used to live with us between 2002 and 2008. He drank, gambled on the horses and tried to set himself

up with several unsuccessful telemarketing jobs. Due to intermittent work his Housing Benefit couldn’t keep

up, he fell behind with his rent due to not making his top-ups and keeping his paperwork up to date. He

was an old rocker, often wearing a long trench coat and he was quite a handful when drunk. I had several

conversations with him about his future with us and the increasing debt. He found a part-time job in Brighton

and a room in a shared house so relocated. We stayed in touch and he continued to visit to collect his post,

catch-up and repay his debt to us slowly over time. Through getting to know Mr C it became apparent that

the main underlying cause of his unhappiness and mental distress was an errant son he hadn’t seen for many

years. In the office one day we set Mr B up with a facebook account and he made contact with his son. He

was able to renew his relationship and he told me how his son needed his help. This provided the drive for

him to refocus his efforts on work and sort out his own personal circumstances. In April 2012 Mr C had paid

off all his debt and moved back into The Colonnades. He is now also up to date with his computer skills and

looking for love on the internet. I have had to give him several warnings about online dating as he is at a high

risk of being ‘fished’ by people. He still wears the same trench coat all year round.

EVERYONE HAS A STORY - HERE ARE JUST THREE FROM OUR CBM

Mr B Date of Arrival: 01.10.2011Mr B was living and working on a caravan site but all of his tools got stolen. He moved into a seaside Guest

House. His weekly rent was £180 and he was struggling to make ends meet. He assumed he would find a

job but watched his savings get depleted in the meantime. He refused to touch a computer or complete any

benefit paperwork. We were recommended to him by a friend. We set him up on Housing Benefits, to cover

our LHA based rent of £117 per week and sorted him out a basic toolkit from our spares. With this he was able

to do a few small jobs locally and for us. This greatly helped to restore his sense of pride. However in 2013 he

broke both his ankles. He had never had a good diet and as a result his bones had become very brittle over

time. After returning from hospital, we lent Mr B our in-house wheelchair and the spare office laptop. This

laptop contains no personal information and is lent out to tenants so they can test drive a computer before

investing in one. By using football sites and tools such as Google Earth (so Mr B could visit online places he

used to live) it created a reason for him to use a computer. Myself or another tenant would regularly take Mr

B out around the pier in the wheelchair or to the shops for supplies. Although he didn’t work again and was

signed off under ESA for his ankles, he later became a carer for another tenant in the building. .

Mrs A Date of Arrival: 23.01.2017Mrs A was working as a barmaid in a pub and renting a 2 bed apartment with her boyfriend. On New Years

day this year, her boyfriend threatened her with violence and killed her cat. She was placed into temporary

emergency accommodation, however her boyfriend found out where she was staying and dumped all her

belongings outside in black bin bags, this was unfortunately the same day as the refuse was collected and

all her belongs were lost. She felt very unsafe with him knowing where she was and having to live in shared

accommodation where, for example, the kitchen was locked at 8pm. Within 3 short weeks her life had

collapsed. Since arriving with us, we have got her some basic supplies, kettle etc and she is now seeking local

employment, feels safe, secure, has her own space and is making connections with other tenants.



Niche PRS has identified 3 separate investment

opportunities. These investments will all be asset

backed so risk is tempered initially by residual

building value and, when converted and occupied,

by the enhanced value based on the rental yield.

The risk as perceived by Niche PRS is in:

(1) the development costs / time and

(2) the period between completion and rental

revenue being generated.

Niche PRS has the management skill set, commercial

acumen and has retained appropriate professionals

to ensure that build costs are properly ascertained,

with contingencies, to ensure accurate cost and time

estimates. Niche PRS's strategy for sourcing tenants

is set out on p26. The need is both chronic and now

acute, as there are 159,000 new SPH's every year.

Based on 18 years experience with Niche PRS 1 there

is no lack of demand, as we have a 30 person plus

waiting list and we have to turn 5 enquiries away

every week as we are always 100% full.

The design of the renovations will allow, in an 'all else

fails' position for the units to be sold on the open

market. Open market sales would have in today's

market, a GDV some 25%-35% higher than the

increased Niche PRS yield value.

The Niche PRS model should be attractive to LAs

based on the financial savings in social costs and

in Niche PRS satisfying the LAs new obligations

contained in the HRA 2017.

Dolphin House has been selected as an example property because it is a current build-to-sell development with

permitted development rights (completion due 2018). Niche PRS were unable to pre-purchase the property

from the developer - the developer valued the Gross Development Value ('GDV') as a sales proposition, at

£21m, the GDV for the scheme as a Niche PRS property was £17m. A financial snapshot is shown on p22-23.

Dolphin House, Windmill Rd, Sunbury-on-Thames TW16 7HT

FINANCIAL RISK AND REWARD


LIQUIDITY


5 KEY FINANCIAL INPUTSThere are 5 key financial inputs that determine the return on investment ('ROI') from the Niche

PRS model for different stakeholders, whether they be the LA, investors or debt providers.

These are:

(1) The method of securing the property, partnership, purchase or long lease.

(2) The cost of renovation.

(3) LHA level - the Niche PRS price point.

(4) Operating costs.

(5) Cost of debt.

3 KEY TIMES OF FINANCIAL ENGAGEMENT(1) Securing the property.

(2) Rolling development funding.

(3) Final GDV long term funding.

The 2 financial snapshots on p22-23 are from the viability spreadsheet Niche PRS has developed for assessing

new properties. They highlight the financial details for the example property, Dolphin House, setting out:

(a) how the equity in the property once fully rented, is calculated - assuming a 65% LTV long term debt.

(b) the annual retained rent after direct operating costs is calculated

They are worked on two basis. The first with full commercial borrowing costs - but with a 'best value' purchase

price and subsequently with concessionary borrowing costs harnessing the LA's or other partner borrowing

powers and partnering with the LA with regards securing the property. There are, of course, many possible

blended opportunities in between.

Liquidity can most easily be achieved at the end of the purchase/development stage. Once

operational, as with all real estate, liquidity is not instant. The options are:

(a) The portfolio can be either sold as a going concern.

(b) Each flat can be liquidated on the open market (subject to any terms agreed with the

seller of the property and/or planning restriction).

(c) Once the value of the business is sufficient, the business could be floated.

(d) Subject to GDV at any given time, the debt could be increased to 70 - 75% of GDV to

release funds for equity withdrawal.

KEY FINANCIAL INDICATORS



Niche PRS have analysed their strategic objectives, which can be separated into two main stages:

Stage 1: Secure and develop targeted properties in line with the Development Timeline (p28)

Stage 2: Owning, operating and managing the Niche PRS property portfolio.

STAGE 1

To negotiate with the LA who will receive financial savings to their Budget from the operation of

the Niche PRS model in their area, and to secure a property for development by partnering or

for 'best value' as against 'best price'.

To achieve low or nil planning risk by sourcing buildings eligible for permitted development

rights to residential use or have the LA underwrite the planning process.

To ensure that properties are secured for less than £15,000 as a financial expenditure for a period

of 6 months or more to ensure assessment for suitability for a Niche PRS home can be finalised

before purchase monies are paid.

To achieve best refurbishment tender, and timetable, from contractors who work within the

locality and have a good reputation with the LA and are functioning within the HACT Valuation

Approach.

To source best funding options for development whether this be with the partner LA, using the

LA's ability to borrow at concessionary rates, or at full commercial rates, or with equity.

To ensure the refurbishment, whilst aimed at a Niche PPS long term rental property, is configured

to allow for each developed flat to be sold on the open market, at market price, if required.

(1)

(2)

(3)

(4)

(5)

(6)

STAGE 2

To offer SPH's an affordable home so they can avoid homelessness and to ensure such a tenant

is financially able to pay the rent and is, or will be, funded to do so.

To market the flats for rent 3 months before practical completion to ensure a 50% rental stream

comes on line within 28 days of practical completion.

To ensure 95%+ occupancy within 3 months of practical completion.

To create the Niche PRS community which is balanced, self-supporting and convivial.

To ensure Niche PRS is maximising GDV based on yield, by operating in excess of 95% occupancy,

less than 3% bad debt, less than 5% slow debt and within the forecast direct operating costs &

budget of gross rental income.

(1)

(2)

(3)

(4)

(5)

THE STRATEGIC PRIORITIES



STAGE 1

Assess the secured property via partnership or at 'best value' as against 'best price'.

Track the planning status of any property against proposed planning risk and cost.

Track the cost of securing any targeted property.

Track tenders received against current market per sqft renovation costs.

Monitor the local rental yields, projected yields, the LHA rates, projected growth, local market rents, and

the £ per sqft achievable if the units in the property were to be sold.

(1)

(2)

(3)

(4)

(5)

STAGE 2

Initial take up, level of satisfaction of new tenants.

The sources and success of initial local marketing efforts.

The rent received against the rent due.

Notices to leave received from tenants listing reason.

Possession proceedings issued listing reasons.

Local expenditure on site remains within the CBM's discretionary level.

(1)

(2)

(3)

(4)

(5)

(6)

To assess weekly:

To assess monthly:

Number of 'empty- flat' days incurred and reasons behind this.

Cost against projections of scheduled and unscheduled repairs and renewals per flat & common parts.

Use per tenant of communal facilities, launderette, coffee shop, computers, free DVDs, and library.

Proportion of tenants paying rent themselves and/or in receipt of a contribution to housing costs and how

this equates to bad or slow debt

(1)

(2)

(3)

(4)

To assess quarterly:

Number of maintenance calls from new tenants within ,1 2 ,3, 6 - 12 months into new occupancy.

Number and frequency of complaints in term of subject, group, response and satisfaction.

Demographics of our tenant group and where they would live if not in a Niche PRS home.

Quantifiable support given to tenants which results in savings to the LA, NHS, DWP & others.

Unquantifiable support given to tenants which results in public value savings.

The reward as a percentage of gross and net rent for business owners as against projected returns.

ROI for partners and/or investors as against projected returns.

(1)

(2)

(3)

(4)

(5)

(6)

(7)

To assess annually:

State of repair of the property as against the sinking fund provision in the budget.

Operating costs and percentage as against projections.

GDV of the Niche PRS property as against net income and sector yield values.

The cost of finance achieved as against the current market rates.

(1)

(2)

(3)

(4)

KEY PERFORMANCE INDICATORS



Number of Properties 1 GDV (Gross) £21,096,414 Number of Properties 1 GDV (Gross) £21,096,414Net Internal Area (m2) 4117 Renovation Cost TOTAL £6,793,050 Net Internal Area (m2) 4117 Renovation Cost TOTAL £6,793,050Net Internal Area (sqft) 44315 Equity in Building (%) 30% Net Internal Area (sqft) 44315 Equity in Building (%) 30%

Purchase Price (maximum) 7,575,718£ Purchase Price (maximum) 7,575,718£ LHA per week £173.41 Stamp Duty and Legals (5%) 398,722£ LHA per week £173.41 Stamp Duty and Legals (5%) 398,722£ AVERAGE Rent above LHA £0.00 AVERAGE Rent above LHA £0.00AVERAGE - Weekly Rents £173.41 AVERAGE - Weekly Rents £173.41Rentable Space 85% EST. SUM Rentable Space 85% EST. SUMTOTAL No. Units 108 STAFF £36,000 TOTAL No. Units 108 STAFF £36,000Average Unit Size (m2) 32.00 OFFICE UTILITIES £6,000 Average Unit Size (m2) 32.00 OFFICE UTILITIES £6,000Renovation Cost (per m2) £1,500.00 INSURANCE £20,740 Renovation Cost (per m2) £1,500.00 INSURANCE £20,740Renovation Cost (per sqft) £139.35 REPAIR / RENEWAL per unit £350 Renovation Cost (per sqft) £139.35 REPAIR / RENEWAL per unit £350TOTAL - Renovation Cost 6,175,500£ TOTAL - REPAIR / RENEWAL £37,925 TOTAL - Renovation Cost 6,175,500£ TOTAL - REPAIR / RENEWAL £37,925Cost per flat 56,992£ SINKING FUND - % of Gross Rent 2.5% Cost per flat 56,992£ SINKING FUND - % of Gross Rent 2.5%

TOTAL - SINKING FUND £23,206 TOTAL - SINKING FUND £23,206FLOAT per unit £300 FLOAT per unit £300TOTAL - FLOAT £32,507 TOTAL - FLOAT £32,507

Gross Rents PA £928,242 TOTAL £156,378 Gross Rents PA £928,242 TOTAL £156,378Void / Unoccupied 5% % of Gross Rent 17% Void / Unoccupied 5% % of Gross Rent 17%Operating Expenses £156,378 Operating Expenses £156,378Breakeven Point (Occupancy) 48% Breakeven Point (Occupancy) 86%Net Rents PA £725,452 Net Rents PA £725,452Gross Yield (%) 5.5 Percentage of Equity 35% Gross Yield (%) 5.5 Percentage of Equity 35%TOTAL £ GDV £16,877,131 Value of Equity £5,906,996 TOTAL £ GDV £16,877,131 Value of Equity £5,906,996

Percentage of Debt 38% Percentage of Debt 65%Value of Debt £6,360,765 Value of Debt £11,011,560Interest rate 2.25% Interest Rate 4.5%

MAXIMUM PURCHASE PRICE £0 Annual Interest Payment £143,117 MAXIMUM PURCHASE PRICE £3,900,000 Annual Interest Payment £495,520Stamp Duty and Legals (5%) £0 Stamp Duty and Legals (5%) £195,000Dev Costs £6,175,500 DISTRIBUTION OF NET INCOME Dev Costs £6,175,500 DISTRIBUTION OF NET INCOMEArrangment Fee 0% Arrangment Fee 1%Dev Fund required £6,175,500 Retained Net Rent £628,747 Dev Fund required £6,175,500 Retained Net Rent £276,344Dev Fund ROI (3%) £185,265 Management/Professional/Business Costs 50,000£ Dev Fund ROI (12%) £741,060 Management/Professional/Business Costs 50,000£ Sub-Total 6,360,765£ Directors Salaries 100,000£ Sub-Total 11,011,560£ Directors Salaries 100,000£ Dev Fund Repayment £6,360,765 Dev Fund Repayment £6,978,315Refinancing (% required) 38% For Distribution to Stakeholders £478,747 Refinancing (% required) 65% For Distribution to Stakeholders £126,344

TOTAL RE-FINANCING

PER PROPERTY - DEVELOPMENT CASH-FLOW

PROPERTY DETAILS


DIRECT OPERATING EXPENSES

TOTAL RE-FINANCING

BUILD TO SELL - PURCHASE PRICE

PROPERTY - GDVPROPERTY - GDV

NICHE PRS (SUNBURY-ON-THAMES) - CONCESSIONARY FUNDING NICHE PRS (SUNBURY-ON-THAMES) - COMMERCIAL FUNDING

PROPERTY DETAILS BUILD TO SELL - PURCHASE PRICE


FUNDING OPTIONS & RETURNS

DOLPHIN HOUSE - COMMERCIAL FUNDING



Number of Properties 1 GDV (Gross) £21,096,414 Number of Properties 1 GDV (Gross) £21,096,414Net Internal Area (m2) 4117 Renovation Cost TOTAL £6,793,050 Net Internal Area (m2) 4117 Renovation Cost TOTAL £6,793,050Net Internal Area (sqft) 44315 Equity in Building (%) 30% Net Internal Area (sqft) 44315 Equity in Building (%) 30%

Purchase Price (maximum) 7,575,718£ Purchase Price (maximum) 7,575,718£ LHA per week £173.41 Stamp Duty and Legals (5%) 398,722£ LHA per week £173.41 Stamp Duty and Legals (5%) 398,722£ AVERAGE Rent above LHA £0.00 AVERAGE Rent above LHA £0.00AVERAGE - Weekly Rents £173.41 AVERAGE - Weekly Rents £173.41Rentable Space 85% EST. SUM Rentable Space 85% EST. SUMTOTAL No. Units 108 STAFF £36,000 TOTAL No. Units 108 STAFF £36,000Average Unit Size (m2) 32.00 OFFICE UTILITIES £6,000 Average Unit Size (m2) 32.00 OFFICE UTILITIES £6,000Renovation Cost (per m2) £1,500.00 INSURANCE £20,740 Renovation Cost (per m2) £1,500.00 INSURANCE £20,740Renovation Cost (per sqft) £139.35 REPAIR / RENEWAL per unit £350 Renovation Cost (per sqft) £139.35 REPAIR / RENEWAL per unit £350TOTAL - Renovation Cost 6,175,500£ TOTAL - REPAIR / RENEWAL £37,925 TOTAL - Renovation Cost 6,175,500£ TOTAL - REPAIR / RENEWAL £37,925Cost per flat 56,992£ SINKING FUND - % of Gross Rent 2.5% Cost per flat 56,992£ SINKING FUND - % of Gross Rent 2.5%

TOTAL - SINKING FUND £23,206 TOTAL - SINKING FUND £23,206FLOAT per unit £300 FLOAT per unit £300TOTAL - FLOAT £32,507 TOTAL - FLOAT £32,507

Gross Rents PA £928,242 TOTAL £156,378 Gross Rents PA £928,242 TOTAL £156,378Void / Unoccupied 5% % of Gross Rent 17% Void / Unoccupied 5% % of Gross Rent 17%Operating Expenses £156,378 Operating Expenses £156,378Breakeven Point (Occupancy) 48% Breakeven Point (Occupancy) 86%Net Rents PA £725,452 Net Rents PA £725,452Gross Yield (%) 5.5 Percentage of Equity 35% Gross Yield (%) 5.5 Percentage of Equity 35%TOTAL £ GDV £16,877,131 Value of Equity £5,906,996 TOTAL £ GDV £16,877,131 Value of Equity £5,906,996

Percentage of Debt 38% Percentage of Debt 65%Value of Debt £6,360,765 Value of Debt £11,011,560Interest rate 2.25% Interest Rate 4.5%

MAXIMUM PURCHASE PRICE £0 Annual Interest Payment £143,117 MAXIMUM PURCHASE PRICE £3,900,000 Annual Interest Payment £495,520Stamp Duty and Legals (5%) £0 Stamp Duty and Legals (5%) £195,000Dev Costs £6,175,500 DISTRIBUTION OF NET INCOME Dev Costs £6,175,500 DISTRIBUTION OF NET INCOMEArrangment Fee 0% Arrangment Fee 1%Dev Fund required £6,175,500 Retained Net Rent £628,747 Dev Fund required £6,175,500 Retained Net Rent £276,344Dev Fund ROI (3%) £185,265 Management/Professional/Business Costs 50,000£ Dev Fund ROI (12%) £741,060 Management/Professional/Business Costs 50,000£ Sub-Total 6,360,765£ Directors Salaries 100,000£ Sub-Total 11,011,560£ Directors Salaries 100,000£ Dev Fund Repayment £6,360,765 Dev Fund Repayment £6,978,315Refinancing (% required) 38% For Distribution to Stakeholders £478,747 Refinancing (% required) 65% For Distribution to Stakeholders £126,344

TOTAL RE-FINANCING


PROPERTY DETAILS



TOTAL RE-FINANCING

BUILD TO SELL - PURCHASE PRICE

PROPERTY - GDVPROPERTY - GDV

NICHE PRS (SUNBURY-ON-THAMES) - CONCESSIONARY FUNDING NICHE PRS (SUNBURY-ON-THAMES) - COMMERCIAL FUNDING

PROPERTY DETAILS BUILD TO SELL - PURCHASE PRICE


DOLPHIN HOUSE - CONCESSIONARY FUNDING



COST BENEFIT ANALYSIS & OUTCOME MEASUREMENTS

Does the proposed investment provide value for money?

By investing in the preventative approach, can the LA reduce levels of need and therefore

budgets in the medium to long term?

What is the payback period for the investment? Is it short enough to invest based on a ‘spend

to save’ approach?

Where the LA invests directly in a program, to what extent are other agencies likely to benefit?

Are the impacts of the proposal primarily fiscal or a matter of public value?

Growing the Niche PRS business and convincing property owners and interested parties, especially if the

building owner is the LA of the 'best value' argument over 'best 'price' will require a robust Cost Benefit

Analysis (‘CBA’). The CBA as recommended by 'The HM Treasury Report, cost benefit analysis guidance for

Local Partners, 2014'. will use the unit cost databases recommended by H M Treasury,31 to value the delivery

of proactive services that can be achieved by a Niche PRS property as against reactive costs. The Niche PRS

proposal must be compared with the counter-factual obligations to be placed on the LA by the Homelessness

Reduction Act 2017. The CBA model can then be used to value the Niche PRS proposal as against other

strategic options to provide the LA or property owner with the 'best value' for money argument.

Such a CBA will examine the questions:

A robust evaluation during and after delivery of a new Niche PRS property will also be undertaken. This will

produce a Net Present Value (‘NPV’) and benefit costs ratio (‘BCR’), based upon:

• Estimates of how many people will benefit from the Niche PRS property

• Forecast of what cost (if any) there is to the public sector – short, medium and long term

• Estimates of the value of the project to the wider economy

• The needs of the cohort that the Niche PRS property will home

• How many of the cohort achieve specified outcomes

This NPV will allow the original CBA to be tracked against interventions achieved and to check project

objectives are being met and whether adjustments should be made.

Once the property development is complete and occupancy levels of 95% plus are achieved, then a full

evaluation report should be produced setting out total costs and total outcomes on a 1 to 5 year basis, so that

the information gathered can be informative for the stakeholders and for the delivery of further Niche PRS

properties.

Niche PRS believes it demonstrates a positive response to all of the above.



For Niche PRS and its partners to evaluate the CBA using the HM Treasury diagram above, there is a need to

input only two levels of costs as the proposal will require no input from any revenue sources.

What will be required is:

• Capital costs – one off cost of acquiring a suitable property and the development costs for

renovating that building, and

• In kind costs – the inputs that are needed in order to make the project a success but which the

public purse will not have to pay for. This is Niche PRS’s ability to source long term fixed

commercial funding at the end of the development period.

These 'In kind costs' will need to be included and counted because of the opportunity provided to the LA.

• Costs of temporary homes

• Social care savings

• Reduction in adult social services

residential care

• Reduction on bed blocking, missed

GP & hospital appointments and

unnecessary visits to A & E.

The current level of social impact and public value being generated by

Niche PRS 1 and calculated using this methodology can be found on p12-15.

• Reduction in JSA

• Reduction in ESA or IB

• Reduction in crime

• Reduction in domestic violence

• Reduction in anti social behaviour

• Reduction in drug and alcohol dependency

Niche PRS believes 'The H M Treasury Report, Cost Benefit Analysis Guidance for

Local Partners, 2014', contains sufficient parameters to enable these calculations

to be produced in an efficient and satisfactory way.

These will cover:

COSTS • Capital • Revenue • In Kind

OUTCOMES • Need • Engagement • Impact • Deadweight • Lag and Drop-off

CASHABILITY ASSUMPTIONS

COST

BENEFIT

ANALYSIS

TOOL

ECONOMIC CASE • Net Present Public Value • Value for Money Benefit Cost Ratio

FINANCIAL CASE • Net Present Budget Impact • Financial return on investment • Payback period



TARGET LOCATIONS & PROPERTIES

Using the Live tables from DCLG32 we have targeted those areas where there are significant recorded

numbers of SPHs threated with homelessness or already homeless and then this group was further

analysed by determining which Councils appeared proactive vis. homelessness and open to new

innovative solutions; we also analysed those with successful bids for ‘Homelessness Prevention

Trailblazer’ status with funding from Central Government.33

100 MILES FROM HEAD OFFICE

To ensure management grows in a symbiotic way as new properties coming on-line, initial

development will be prioritised in the Greater London area and specifically targeted towns

(with the greatest need) and then within 100 miles of current management headquarters,

near Guildford, in Surrey. As LHA levels determine Niche PRS rental levels, which in turn

determines GDV and re-financing limitations, Niche PRS will initially target areas with a LHA

of over £150 per week. As the portfolio grows, a wider spread of LHA levels can be supported

by the portfolio as a whole.

Target properties will be in central urban locations, close to work opportunities and transport

links. These criteria are important because the large majority of Niche PRS tenants cannot

afford a car and often lack the self discipline required to travel far for work or job opportunities.

Properties are required to have a Net Internal Area ('NIA') of 15,000 sqft or more – to provide

between 35 – 120 flats. This ensures an economy of scale for the CBM and tenant community

cohesion. The type of property also has to be efficient for conversion purposes, 1960's and

1970's office buildings with narrow floor plates are generally suitable in this regard.



GROWTH OBJECTIVES

There is significant latent demand in the market for the Niche PRS model – one that

specialises in the needs of the SPH, is truly affordable, safe, secure and socially innovative.

Therefore growth will be driven largely by the rate at which Niche PRS can identify & secure

properties and roll-out its model, whilst at the same time concentrating on ensuring that the

management ethos, style and skill base are properly protected, maintained and embedded

throughout the whole organisation.

NEAR TERM MID TERM LONG TERM

TO DECEMBER 2017

Acquire a new

property

(Niche PRS 2)

TO DECEMBER 2021

300+ units under

management or

construction, in 4-5

properties across the

South.

2022 AND BEYOUND

The development

and operation of 50+

properties across

the UK. Including all

possible LHA levels, and

investigating families/

multiply occupancy

models.

There have been 4 key trends in solo living that have continued over the last decade:

• Elderly people, particularly women are the highest group living alone.

• The fastest growth in single living is for the age group 25 – 44.

• Solo living is growing faster for single men.

• Solo men remain living alone more permanently than solo women.34

While not all single people will face homelessness, what has to be factored into the current housing crisis is

that people living alone face specific problems, vulnerabilities and extra costs that can risk the security of their

tenancies. The loss of a private rented tenancy is now the leading cause of statutory homelessness.35

Therefore Niche PRS sees the demand today as both chronic and acute. Niche PRS wants to demonstrate

that there is an alternative to higher and higher rents and profits, and where bridging the gap between a

house and a home at an affordable cost can change lives and, in doing so, save the state money.


1 PLANNING

DEVELOPMENT TIMELINE

1

4

2

5

3

6

YEAR 1

Q1 Q2 Q3 Q4

YEAR 2

Q1 Q2

2 CONVERSION

The conversion process is the

most time consuming of the six

phases. Niche PRS will employ

a main contractor on a Design

Build basis. Niche PRS will retain

their own Architect, QS, M&E

specialists and Project Manager

to monitor the development

and address any issues that

arise during the process. Niche

PRS has already designed

an 'ideal apartment' with full

specifications to use as a design

template for each individual

property and location.

3 COMMUNITY

The Senior Community Manager

('SCM') will have relocated to

the area to embed himself with

the local community and local

organisations 3 months prior to

the property being completed.

This time will give the new

CBM who will eventually run

this building, and who at this

point has already completed

3 months training with Niche

PRS 1, another further 3 months

running Niche PRS 1 single

handed before relocating to the

new property in Phase 4.

This process will start with a

detailed design assessment of

the property, followed by the

planning application for the

conversion to residential use

under permitted development

guidelines. Working drawings,

quantity surveying, M&E and

any other professional services

will be retained by Niche

PRS before commencing the

tendering process to both local

and regional construction firms

bearing in mind the HACT

wellbeing valuation approach.



Once a property has been targeted, analysed and secured, the conversion of the

property and roll out of the service will follow the process illustrated below.

Q3 Q4

YEAR 2 YEAR 3

Q1 Q2 Q3 Q4

4 50% FULL 5 100% FULL

3 months after the first tenants

arrive, the property will be 95%+

full. The SCM will have moved on

to begin training the next new

CBM. The SCM or the Company

Directors will continue to visit

the new property once a week

for another 3 months and then

monthly after that. Weekly

accounting means any 'Red

Flags' are quickly spotted and

for tenant security, the contact

details for Head Office are clearly

displayed in all the communal

spaces and online.

6 NEXT

This is the earliest Niche PRS

would except to start the

planning phase for the next

Niche PRS property. The limiting

factor in rolling out faster is

the time it takes to establish a

sustainable community and

train the new CBMs. If this step

is not rushed, but completed

comprehensively at the outset,

the property and its community

will go from strength to strength

and therefore will grow and

mature as a stable and valuable

asset.

The new CBM will also now

relocate from Niche PRS 1 to

the new property. The first few

tenants into this new property

will be existing tenants willing

to relocate from Niche PRS 1.

They are the 'starter yoghurt' for

this new community. They know

the model and the new CBM.

The new CBM will together with

the SCM begin to select tenants

and to create the supportive

and balanced community that

allows Niche PRS tenants to

thrive.

(The specifics and scale of the property may affect the overall time required)




MANAGEMENT STRUCTURE & TENANT SOURCING

Niche PRS has a lean team of motivated management and advisors that combine proven

PRS market knowledge, commercial & property development experience and social impact

insight. Below is Niche PRS's organisational chart for expanding the property portfolio. The

current management system is sufficient to oversee and manage up to 6 Niche PRS properties

before additional layers of middle management are required, as shown below.

BUILDING 1-3

BUILDING 4-6

BUILDING 7-9

BUILDING 10-12

BUILDING 13-15

BUILDING 16-18

CBMS

REGIONAL MANAGERS

SCMS

NON-EXECUTIVE DIRECTORS

COMPANY DIRECTORS

EXTERNAL PROFESSIONALS

BOARD OF DIRECTORS

POD 1 POD 2 POD 3 POD 4 POD 5 POD 6

The quality control of management and the CBMs is key to the success of the model and much work has gone

into developing a forward thinking structure for growth once the portfolio exceeds 6 buildings – at which

point layers of middle management will be created and buildings grouped, into pods based on geography,

for synergy and group support.

QUALITY & OPERATIONAL MANAGEMENT



The CBM will be drawn from the local community. This will provide tenants with peer to peer support based on

common understanding and association with place. The training programme for our CBMs is well developed

and ensures they are skilled communicators and not just ‘box tickers’. CBMs are a crucial part of the model

and will be supported and developed from the company’s existing skill base. They are integral to the tenant

selection process and as long as the rental income is achieved and the building runs harmoniously they can

enjoy the CBM’s home and a certain flexibility in hours to suit their lives. All new members of staff will have

completed a lengthy training period to ensure absorption of and practice in the ethos and style of Niche PRS

management procedures. Niche PRS will have known and trained the CBM for 9 months before they are

solely in charge of their 'own' property. This time period will ensure they are suitable, fully trained and happy

in their position.

RECRUITMENT AND TRAINING

Early channeling of tenants through to a new Niche PRS property can be achieved via several routes:

TENANT SOURCING & SELECTION

• Advertising

• Local radio talks

• Word of mouth

• Local HAs and Social Services

A HAC for SPHs could be located in the Niche PRS property and offer to the LA the solution to their obligation

within the HRB to provide this information. All letting formalities are in-house and free to tenants, combining

this with our flexible requirements from tenants, means there are almost no barriers to eligibility. Experience

has shown that there will be a long waiting list for homes to become free and there will no problem in having

tenants move in swiftly as flats become available. With Niche PRS 1, not only is there a 30 person waiting list

but 5 people a week who knock on the door are turned away as there is simply no vacancies.

• Homeless Charities and Other Charities

• Department of Work and Pensions (DWP)

• Homelessness Advice Centre (HAC)

The first 6 months are the most crucial for setting the tone and social expectations of the tenants in a new

Niche PRS property. By starting in the right direction, the subtle power of peer persuasion can be leveraged

and allowed to permeate the building’s ethos.

COMMUNITY CURATING

Niche PRS have an extensive Managers Handbook detailing the correct operating procedure and guidance on

how to be helpful without ‘crossing the line’. Bronze, Silver and Gold accreditations will help CBMs to grow and

take on new responsibilities over time. The direct contact details for the Head Office will be clearly displayed

in all communal areas and online so tenants can always have a clear route to Head Office if required.



SENIOR MANAGEMENT

Maggie is founder of the Niche PRS model. Maggie studied law at University

College London, qualified as a Solicitor and practiced for 12 years, dealing

with a variety of legal issues. These have included city commercial

transactions, property based acquisitions and disposals, divorce, child care,

possession and tribunal work. Maggie had many successes during her years

in practice, notably dealing with export control in 1987, where she received

Government recognition and endorsement for her actions. Maggie also

brought to Court one of the very first cases protecting a women’s overriding

rights of occupation in their homes when they were not registered as

owners. The success of her case (amongst others cases following on) led to the introduction of the Matrimonial

Homes Act 1983. Prior to starting the model in 1998 that would become Niche PRS, Maggie built up a very

profitable student property portfolio.

MAGGIE ROUTLEDGE - CHIEF EXECUTIVE DIRECTOR

Guy has over 10 years industry experience covering a wide range of areas

including architecture, design, investments, property developments and

project management. In 2012 Guy relocated his family to Berlin to research

and better understand the mature PRS market there and use these insights

to inform, shape and develop the Niche PRS Social and Affordable Housing

Model going forward. Guy has also co-founded a successful and growing

Design Studio producing furniture and kitchens during his time in Berlin.

Guy holds a 2:1 in Architecture BSc from Bath University.

GUY ROUTLEDGE - EXECUTIVE DIRECTOR - PROJECTS

Cameron achieved a 2.1 in applied psychology and computing from

Bournemouth University. He has 13 years of experience in the customer

relations industry and being a Team Leader in challenging environments.

He has an analytical approach to problem solving and a passionate desire

to motivate and care for others. He has been the CBM of Niche PRS 1 for the

last 7 years, and his results and insights speak for themselves.

As the portfolio grows Cameron's full worth as SCM will become evident

and an integral part of the community curating ethos.

CAMERON MUIR - SENIOR COMMUNITY MANAGER



Operators in the Private Rented Sector ('PRS') today can be broadly separated into 2 main categories, the

Private Landlord (small scale) and the Institutional Landlord (large scale), and while there is some cross over

between the two groups, both are in the main looking for short term high yield properties with the option to

sell in the future. They don’t exclude the long term rental position but sales tends to be their default position

as an end game. They are highly profit motivated and as such the rents are as high as the market will allow.

The only properties that are affordable to the less well-off SPH are the lowest quality properties from the

Private Landlord market. This means in areas where the housing shortage is most acute, high demand and

low supply is creating opportunities for exploitation and abuse. Such abuse is in the form of unreasonable

letting agents’ fees, unfair terms in leases, landlords letting out dangerous and/or overcrowded properties and

often properties that are not suitable for human habitation. This lack of affordability within the PRS has led to

the current position where losing a PRS tenancy is the highest cause of homelessness today.36

SPHs face many challenges in the Private Rented Sector. Most of these are exacerbated for lower income

individuals and for those managing the ongoing impact of psychological and physical issues.

Living costs are higher for the SPH - single parents spend on average 30% of their income on rent,

while single people (with no children) spend 35% of their income on rent. This compared with couples

with dependent children who spend the smallest proportion of their income on rent, 21%.37

Those living alone have a natural predisposition to feel lonely and isolated and it consequently requires

both effort and money to create a social life.

People living alone can face greater labour market risks with loss of a job often meaning renting

becomes unaffordable.

SPHs in housing need are likely to continue to have trouble in accessing social housing, as demand

continues to outstrip supply and they remain the lowest priority for a HA to home.

Living solo may lead to greater isolation, worse health and mental health outcomes for some groups,

particularly men.38

SPHs are more vulnerable to crime; as more people live alone, there may be greater demand for

victim support services and police protection.

Transitions into solo living can precipitate poverty, especially for those forced to become SPHs.39

MARKET OVERVIEW FOR THESINGLE PERSON HOUSEHOLD ('SPH')

CHALLENGES FACED BY SINGLE PERSON HOUSEHOLDS ('SPHS')



INSTITUTIONAL LANDLORDS

PRIVATE LANDLORDS

SOCIAL HOUSING

Institutional investors represent a recent and new source of finance for the housing market, Legal

& General alone have pledged £1bn worth of investment in the PRS.40 Almost entirely, the projects are new

build projects, and the target tenants are either tech savvy ‘up and coming‘ occupiers who can pay for extras

such as, concierge services, cinema rooms, gyms, yoga spaces etc; or they are family based and slightly more

modest schemes. There is no social support and HB (and even top up) in most cases is not accepted. The

required affordable element of any new development is usually reserved for social renting – but the SPH is not

a priority tenant and will not easily or quickly find a home within those limited social offerings.

Over 4.5 million households now rent their home from a private landlord – nearly twice as many as in

2002.41 The recent change in tax relief for mortgage debt, for private landlords, has decreased the appetite for

some private landlords to increase their portfolio and less favourable tax treatment is thought will encourage

higher rent demands to counter the higher tax charge.42 Over 16% of tenants say they can't fund a 1% increase

in rent, 42% say they could not fund a 5% increase in rent but 56% of landlords said they would raise rent

within the next 12 months and 40% say that rise will be 5.6%.43 It is statistics like these which illustrate why

losing a PRS tenancy is now the highest cause of homelessness. Compounding this problem for potential

Niche PRS tenants is that, it is so much harder for a SPH to fund any increase in rent at all. Reward driven

private landlords make money out of the number of bedrooms a house has to rent – therefore one bed flats

are not targeted as they have the poorest returns, increasing the supply and demand mismatch, simply drives

rents still higher and further out of reach for the less well-off SPH.

This is Council Housing or HA properties. The demand for these properties is very high; currently 1.8m

households are on LA waiting lists.44 Those with greatest priority are understandably housed first such as

families with dependent children and people with severe needs or learning difficulties. Therefore, this is a very

hard, and often an impossible route to a new home for the SPH.

NICHE PRS

1

2

4

1

4

2

3

Niche PRS has undertaken

extensive research and analysis

of the many reports published on

the Housing Market, particularly

the PRS and has identified 4 broad

options available for the SPH.

3 - socially innovative, truly affordable, truly long term housing solution for SPHs.



In terms of acquiring suitable properties for development, Niche PRS faces competition

from private sector developers seeking to (1) develop and sell or (2) develop and rent out

properties at full market value. This competition is not new and it is why Niche PRS requires

the understanding and cooperation of the state sector and property owners to embrace a

'best value' argument over the lifespan of a property and not just the short term and one-off

'best price'.

COMPETITION FOR PROPERTIES

There is no direct competition for the “End-to-End” integrated community housing provision

for the SPH that Niche PRS offers. There are many charitable operations helping with rough

sleeping, hostels for over-night stops and many HAs offering homes at social rents for those

deemed eligible and in priority need. The SPH who is homeless and the SPH in danger of

homelessness have tended to fall through every safety net that there is to fall through. Niche

PRS is bridging the gap.

The HRA before it became law initially had at its first reading in Parliament, an obligation for

the LAs to be required to house SPHs faced with homelessness. This clause was later removed

at the request of the Local Government Association ('LGA') who recognised the need, but

feared the lack of obvious funds, and available accommodation for such an obligation.45 Niche

PRS can offer a solution without the need for concessionary long term funding from investors,

the LA or the state, and with the right terms can offer blended returns to its stakeholders.

COMPETITION FOR TENANTS

The market is expanding, 1 in 5 of us will be living alone by 2033.46 Niche PRS has huge experience and

is successful at offering “true affordability” with longevity of tenancy where rents track local LHA rates. So,

if people fall on hard times, they can still afford to remain in their home. The Niche PRS Model is also not

age limited. Whilst the LHA rates for single people requires you to be 35 years or older to be entitled to a 1

bed housing allowance as opposed to just a room rate, Niche PRS can accept singles of any age. Niche PRS

focuses on the SPH and the specific associated challenges of this demographic. This is a unique approach in

the market. Like the HAs, Niche PRS also provides sign-posting for advice on benefits and other services for

tenants, however, it goes far beyond this by creating a community based in one block, with support from the

CBM and mutual neighbourly support and tenant to tenant respect – something Niche PRS has found to be

unique in the PRS market.

MARKET COMPETITION ANDOUR COMPETITIVE ADVANTAGE

COMPETITIVE ADVANTAGE



Niche PRS is confident that the information contained in this business plan clearly demonstrates

the success to date of the existing property, Niche PRS 1. This is a multifaceted success: a success

in financial terms for the business, a success in social impact terms for the lives of the tenants, a

success in the direct fiscal savings to the LA and other agencies and a success in the public value

savings these impacts generate.

Niche PRS believes the arguments for and benefits of expanding this socially innovate affordable

housing model to other locations in England has been clearly demonstrated.

Any interested parties who wish to discuss any part of this business plan in more detail, discuss

any potentially mutually beneficial partnerships with Niche PRS, and/or arrange a visit to Niche

PRS 1, are invited to contact us via the email address provided. This document is also available

to download via our website.

www.nicheprs.com

[email protected]

AFTERWORD



EXTRA INFORMATION AVAILABLE ON REQUEST

• Full financial appraisal for a targeted building and for the growth of the portfolio• Full details of management and operational practices• Full CV’s of Senior Management, NXD’s and retained professional advisors.• Full breakdown of current tenant info and profiles (personal info redacted)• Full independent Tenant Satisfaction Survey (2013)• Full independent Social Impact Report on Niche PRS 1 (2017)



1. DCLG: Rough Sleeping Statistics Autumn 2015, England, 25th February 2016, p1.2. DCLG: Rough Sleeping Statistics Autumn 2015, England, 25th February 2016, p6.3. Crisis: The Homelessness Monitor, England, January 2016, p76.4. DCLG: Household Projections 2008 to 2033, England, 26th November 2010, p1.5. DCLG: Household Projections 2008 to 2033, England, 26th November 2010, p1.6. Homelessness Reduction Bill: HL Bill 96: 56/2: 2017, p7 – para5 (2).7. Crisis: Better than cure?, Executive Summary 2016, p6.8. https://hansard.parliament.uk/lords/2017-02-24/debates/F948A9F6-E028-47ED-ADDC- E946B01740AD/HomelessnessReductionBill. 11.08am, Baroness Manzoor, column 508.9. DCLG: Local Authority Assets: Disposal Guidance, March 2016, p11.10. Empty Homes: Affordable Homes from Empty Commercial Spaces, 2016, p63.11. Crisis: Homelessness and Loneliness ‘The Want of Conviviality’, 2000, p9. 12. DCLG-Housing White Paper- Fixing our Broken Housing Market, 2017.13. The HM Treasury Report, cost benefit analysis guidance for Local Partners, 2014.14. Crisis: At What Cost, July 2015, p11 – table 2, p13 – table 3, p15 – table 5, p16 – table 6. 15. Age UK: Promising Approaches to reducing Loneliness and Isolation, January 2015, p6.16. Age UK: Promising Approaches to reducing Loneliness and Isolation, January 2015, p7.17. Age UK: Promising Approaches to reducing Loneliness and Isolation, January 2015, p6.18. The HM Treasury Report, cost benefit analysis guidance for Local Partners, 2014.19. The Kings Fund: Bringing together physical and mental health, March 2016, p4.20.. NHS England: The Five Year Forward View for Mental Health, February 2016, p10.21. NHS England: The Five Year Forward View for Mental Health, February 2016, p10.22. The HM Treasury Report, cost benefit analysis guidance for Local Partners, 2014, p55.23. Crisis: Mental Health - Adult Single Homeless Population, 2009, Executive Summary, p5.24. Social Impact Report for Niche PRS 1 (download - www.nicheprs.com) 25. Knight Frank: Care Homes, Trading performance Review 2016, p4.26. https://data.gov.uk/data-request/nhs-hospital-stay.27. http://www.nhsconfed.org/resources/key-statistics-on-the-nhs (International Comparisons)28. http://www.bbc.com/news/uk-3337597629. http://www.bbc.com/news/uk-3337597630. DCLG: Understanding Troubled Families 2014, p7.31. The HM Treasury Report, cost benefit analysis guidance for Local Partners, 2014.32. DCLG: Live Table 784.33. https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/584760/ Homelessness_Prevention_Programme_-_Successful_bids.pdf.34. JRF: Single Person Households and Social policy: Looking Forwards, 2006, p3.35. DCLG Live Table 774.36. DCLG Live Table 774.37. DCLG: English Housing Survey, Headline Report 2013-2014, p87.38. JRF: Single Person Households and Social policy: Looking Forwards, 2006, p4.39. JRF: Single Person Households and Social policy: Looking Forwards, 2006, p3.40. http://www.legalandgeneralcapital.com/_resources/LandG-secures-second-prs-deal.pdf.41. DCLG: English Housing Survey, Headline Report 2015-2016, p6.42. http://www.propertyreporter.co.uk/landlords/worrying-research-finds-a-ticking-time-bomb- in-the-prs.html.43. http://www.propertyreporter.co.uk/landlords/worrying-research-finds-a-ticking-time-bomb- in-the-prs.html.44. DCLG: Live table 600.45. LGA: Policy Briefing, Homelessness Reduction Bill, 12th October 2016, p1. 46. DCLG: Household Projections 2008 to 2033, England, 26th November 2010, p1.

FOOTNOTES



1. DCLG Live tables 20172. DCLG White Paper on Housing ‘Fixing our broken housing market’ 20173. Hansard: the 2nd reading of the Homeless Reduction Bill: The Lords 20174. Public Works Loan Board Interest Rate Notice 078/17 20175. RICS February Residential Market Survey 20176. The Homeless Reduction Bill 20177. Briefing paper ‘ Households in temporary accommodation: No: 02110 20168. Crisis: Better than a cure 20169. Crisis: The Homelessness Monitor England 201610. DCLG: Local Authority Assets: Disposal Guidance 201611. DCLG: Rough Sleeping Statistics Autumn 2015, England 201612. DCLG: Statutory Homelessness January to March 2016 201613. Empty Homes ‘ Affordable homes from empty commercial spaces 201614. HACT: Social Value and Procurement 201615. Homeless Prevention Programme - successful bids 201616. Knight Frank: Care Homes Trading Performance Review 201617. National Housing Federation: Private Landlords and Housing Benefit 201618. NHS England: The Five Year Forward View for Mental Health 201619. One housing ‘value for money: statement 2015 – 2016’ 2016 20. Private Rented Sector: Alternative Investment Sectors 201621. Resolution Foundation: The housing headwind. 201622. Savills: spotlight on Rental Britain 201623. The homelessness legislation: an independent review of legal duties 201624. The Kings Fund: Bringing together physical and mental health 201625. Age UK: Promising Approaches to reducing Loneliness and Isolation 201526. Crisis: At What cost? Financial costs of single homelessness 201527. Cushman and Wakefield: Res Affordable Watch 201528. DCLG: Accelerating Housing Supply and Choice in the PRS 201529. DCLG – English Housing Survey – headline report 201530. E C Harris – pushing the boundaries 201531. Mind: In the Red 201532. Paragon Todays Private Rented Sector 201533. PRS – Code of practice 201534. Savills – approaching peak loneliness 201535. DCLG – English Housing Survey – headline report 201436. DCLG – Housing and well-being Report 201437. DCLG: Understanding Troubled Families 201438. Shelter ‘A roof over my head’ 201439. The HM Treasury Report, cost benefit analysis guidance for Local Partners 201440. RIBA – a case for space 201141. DCLG: Household Projections 2008 to 2033, England 201042. Debt and mental health: What do we know. 201043. Crisis: ‘Mental Health in the Adult Single Homeless Population’ 200944. Mind: In the Red, Debt and mental Heath 200845. JRF: Single Person Households and Social Policy 200646. Shelter: Living in limbo 200447. Crisis: Homelessness and Loneliness ‘The Want of Conviviality’ 2000

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BRIDGING THE GAP

NICHE PRS LTD

[email protected] Old Stables, Paddock Woods, Wormley, Surrey GU8 5TRwww.nicheprs.com

PREVENTING HOMELESSNESS FOR SINGLE PEOPLE

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BusinessPlan - nicheprs.files.wordpress.com · either in one property, or in close proximity to each other, located in urban areas. Establish self supporting micro communities within