Property Firm Lines up £2 billion Swoop on Buy to let flats

The geography of buy to let is due change as corporate investors move into the private letting market.

The warning comes as Sweden’s largest private housing investor has instructed a leading property consultant to buy up 10,000 flats around London.

The purchase would create one of the UK’s largest rental portfolios in an open market dominated by Grainger plc.

Swedish company Akelius has earmarked £2 billion for spending on flats in mid-market blocks around London over the next five years

The firm is to buy portfolios from other investors rather than new-build properties.

“Our goal is to create a portfolio of residential properties consisting predominantly of freehold and investments let on assured shorthold contracts. The initial geographic focus is London and nearby suburbs with good transport connections,” said Lars Lindfors of Akelius.

“We believe tenants will be particularly attracted to rental accommodation that is owned and managed by an experienced landlord with a long-term outlook on its investment.”

The company’s strategy is based on the expectation that renting privately will increase in the the UK.

Other research suggests 20% of all private homes will be let to tenants over the next few years.

Property consultant CB Richard Ellis has been commissioned to find properties for Akelius.

“The first mover often creates the confidence for others to follow and, given the scale of this company, this could open up private rented for other overseas institutions,” said Chris Lacey, head of residential investment at CBRE.

Traditionally, corporate investors have stayed out of the UK home rental market, but predictions of a shift towards letting rather than buying due to difficulties for buyers in raising deposits and mortgages is encouraging overseas and institutional investors to look at buy to let.

Several housebuilders are looking at joint venture schemes with property management firms to let instead of selling new homes.