AHTO Group Ltd (AHTO) ‘Affordable Homes to Own’ has announced plans to help those finding it difficult to buy their own home, by investing £1 billion over the next five years in Intermediate Rent-to-Buy homes. These will be acquired from shared ownership or private sale housebuilders in cities and towns across the UK; AHTO will then lease acquired properties to a partner, with customers able to buy their home at a discount to open-market-value at the end of their tenure.

AHTO is a privately owned business with a social purpose driven by outcomes which benefit local communities. Fully funded and supported by a network of investors, AHTO was  established in 2020, with a head office in London. 

AHTO provide an affordable Intermediate Rent-to-Buy (IRTB) product that supports Government and local councils’ efforts to help thousands more people onto the housing ladder. AHTO’s IRTB product allows customers to transition to full home ownership at a demonstrably lower cost than shared ownership, and is a product that is compliant with the National Planning Policy Framework.

The average time taken by a UK household to save for a deposit is now thirteen years. With the AHTO IRTB product, customers pay affordable rents allowing them to save enough for a deposit and build their credit rating. When they are ready to buy, AHTO enable customers to purchase at a significant discount to the property’s open market value.

AHTO has secured substantial funding to invest in affordable housing, without the need for grant or subsidy.  It acts as a conduit to enable long-term institutional capital to participate in the affordable housing market, working with HAs, local authorities, developers and capital providers to help bring more affordable homes to the communities that need them and create places for people to call home.                                  

AHTO partners with HAs and local authorities, empowering them to meet their affordable home deliverability targets and manage their existing stock sustainably. AHTO’s product also has a further positive social impact in terms of offering a real and cheaper alternative to current affordable home models.

With Citi UK acting as a structuring advisor and financing arranger to institutional capital, AHTO will purchase (at a discount to open-market-value OMV) newly built affordable homes (Section 106 homes) or private sale homes from either HAs or UK housebuilders. AHTO focus on investing up to £150 million per project in order to secure residential developments of up to 500 homes, including apartments and houses, in cities and commuter towns such as London, Leeds, Bristol, Manchester, Reading, Dartford and Woking.

AHTO will then lease the acquired stock to a HA partner who will secure customers for the homes. The customers will be given the opportunity to purchase their home for a 10% discount to OMV. It is this Intermediate Rent-to-Buy model of homeownership which AHTO believe has huge growth potential in the UK over the next five to ten years.

AHTO can acquire existing or committed homes from a HA partner’s pipeline and then lease them back to the HA, thereby freeing up HA capital; this preserves management income and access to the homes for the HA. AHTO can also engage in joint bids on large developments/sites where a HA partner has agreed to lease AHTO owned homes.            

AHTO is committed to careful procurement targets and clear reporting procedures regarding Environmental, Social and Corporate Governance (ESG) in affordable housing.  These cover objectives such as sustainability, zero carbon targets and safety standards.    

Deploying an IRTB model, some 1,500 homes have already been delivered through the Rent-to-Buy structure in England and Wales. Over thirty English Councils have already approved the IRTB approach, with around another forty Councils favourable towards the approach. Within Greater London, nine of the London Boroughs are favourable towards Intermediate Rent-to-Buy housing provision.

Sam Senchal, Chief Investment Officer of AHTO says: “The only viable solution to the UK’s affordable housing crisis, without grant funding or subsidies, is to channel institutional investment into the market. The Intermediate Rent-to-Buy model brings together our partners and institutional investors to deliver more affordable homes for families with less complexity and cost compared with current affordable home models. At AHTO we are passionate about helping provide high quality homes for people on lower incomes and supporting our Housing Association partners to help customers become homeowners.”