Are corporate landords taking over?

Are corporate landords taking over?

0:01 AM, 22nd June 2023, About 8 months ago 5

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Hello, I’m extremely surprised it has taken so very long for commentators to only now wake up to the fact that an ever-increasing number of major corporate investors, pension funds, American and other private equity companies have and are targeting the UK BTL market.
It was several years ago the FT published an article reporting Goldman Sachs was entering the UK BTL market. So why the surprise now?

Where Goldman goes others soon follow!

Compared to the small amateur UK BTL landlord large incorporated companies have a massive advantage in terms of borrowing power, leverage, tax subsidies, ability to charge interest against profits, dividend payments and above all the ability to fund the construction of new buildings for tenants and/or convert existing office blocks. Unlike the small landlord, paying for the installation or upgrading necessary to meet EPC standards will be no problem for major landlords.

We have been seeing it for years in the student rental sector with highly leveraged long-term investors such as Unite operating easily, profitably and successfully across the UK. The student model has moved to the PRS and (with the exception of the FT) commentators are just waking up to the fact.

Will this prove to be the final nail in the small BTL investors’ coffin?

Thanks for reading,

John


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Comments

Darren Peters

14:30 PM, 22nd June 2023, About 8 months ago

I keep hearing this but haven't actually seen any breaking soil

Further a Guinness Trust subsidiary development near me of buy or part-buy has been stopped mid-way through.

I wonder if the big boys don't want to get stuck with stock in what they predict will be a slump .

Grumpy Doug

16:32 PM, 22nd June 2023, About 8 months ago

".... as of early 2022, there were 72,668 build-to-rent homes in the UK, a 19% increase over a year. 46,304 BTR homes were under construction, a 14% increase over a year. A sizeable 106,380 BTR homes were in planning, an 11% increase over a year."
These were the numbers in early 2022 - the BTR sector built, or in plan, represents 5% of the PRS. The BTR market is now stalling as a result of inflation, high material and labour costs, and finance getting better returns elsewhere. It's also city centre based, typically glitzy high rise living at a very high cost.
Politicians love making a lot of noise about it because the developers bung them donations and I suspect high paid jobs whilst they're useful.
Personally I'm happy to compete with Goldman Sachs and co during my lifetime

Darren Peters

16:35 PM, 22nd June 2023, About 8 months ago

Reply to the comment left by Grumpy Doug at 22/06/2023 - 16:32
Interesting to see.

I'm also happy to compete with anyone in a fair market

Amy Lo

17:09 PM, 22nd June 2023, About 8 months ago

Where do you see BTR stalling?
I was going to rent out my 2 beds flat but now I'm seriously worried about the enormous BTR in development right across my street. I don't see them slowing down, they seem to be building and building more. Now I am thinking maybe I need to sell even if I don't want to.
Am I the only one worried?

Grumpy Doug

21:35 PM, 22nd June 2023, About 8 months ago

Reply to the comment left by CT at 22/06/2023 - 17:09https://www.theconstructionindex.co.uk/news/view/btr-boom-shows-signs-of-stalling
https://www.constructionnews.co.uk/home/get-living-pauses-200m-glasgow-btr-scheme-due-to-rent-controls-16-03-2023/
Just a couple of examples. I do take your point though but it's horses for courses. City centre lets will be more exposed to BTR, but even so look at their prices etc. Not everyone wants to pay crazy money ...

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