Hoping to cash in on the UK government’s market-stimulating Help to Buy scheme in the high-priced London homes sector, a large Malaysian property developer has agreed to take a 70% stake in the residential business of UK builder Willmott Dixon.
If approved by regulators the stake in Be Living would give EcoWorld International access to banked land ready for around 6,700 homes that together have a Gross Development Value (GDV) of at least £2.5bn ($3.3bn), Willmott Dixon said.
The deal boosts EcoWorld International’s UK holdings fourfold, with sites across London including in Barking and Dagenham, Brent, Bromley, Lambeth, Tower Hamlets, Westminster (pictured), and even a major project outside London, in Woking, Surrey.
Announcing the agreement of heads of terms yesterday, Willmott Dixon said the new partnership would look to capitalise on the UK government’s Help to Buy scheme, which loans home-buyers in London 40% of the asking price of a newly built home without any fees for five years. (Outside London the scheme loans 20% of the asking price.) It applies to homes valued at not more than £600,000.
The scheme has been criticised by some including property firm Colliers for inflating home prices in the capital, where the unnaffordability of homes has far outpaced the UK average, according to the Office of National Statistics.
But EcoWorld’s executive vice chairman Sri Liew Kee Sin said the move showed its commitment to "address the housing shortage across London and the South East of England".
He added the deal would "serve the needs of both the local market and the broader international audience that calls London home".
Rick Willmott, chief executive of Willmott Dixon, said: "The proposed investment … is the culmination of our long-term strategy to inject additional capital to support Be Living’s growth plans as a stand-alone business following its demerger from Willmott Dixon last year."
Willmott Dixon added that the partnership would tap into the build-to-rent market which it said "has become increasingly popular in London".
The terms of the proposed deal were not disclosed.
Image: The deal would give EcoWorld access to development sites in London, including in Westminster, pictured, where the median home price is now 24 times average salaries, according to the Office of National Statistics (Wikimedia Commons)