A new business aiming to build 5,000 affordable homes by 2020 has secured up to £70m in funding.
Rentplus said the funds, from BAE Systems Pension Funds Investment Management, will be used to help deliver its first 580 homes.
BAE has approved an initial £35m private placing of an inflation-linked bond for the company with a possibility of an additional £35m commitment, the Plymouth-based company said.
Rentplus provides aspiring home owners with privately-funded rent-to-buy housing. The company said it offers affordable rents, at 80 per cent of open market rent, and a 10 per cent gifted deposit for the homes.
Its model provides tenants with the option to purchase their home after five, 10, 15 and 20 years, with all houses sold after 20 years. Rentplus also aims to replace all homes that are sold.
Rentplus said it has 8,500 homes in its national pipeline and requires £1bn of institutional and pension fund investment to deliver this target. It is in talks with a number of other potential funding partners.
Numis Securities advised Rentplus on the fundraising and Savills acts as its property adviser.
John Gildersleeve, chairman of Rentplus, said that while home ownership is "overwhelmingly the first choice across the UK", nearly half of households in the 25-34 age group currently live in the private rented sector.
"The primary reason is lack of affordability, the driver of which is lack of affordable housing supply," he said.
"We must therefore fix the model and innovative solutions such as Rentplus’s intermediate rent-to-buy are absolutely crucial in a climate where rents are increasing and deposits required to buy continue to climb – reports earlier this year put the average deposit to buy a home at more than £80,000. Our rent-to-buy model is designed to solve both of these issues."