BTL landlords will be ousted as City investors move in

BTL landlords will be ousted as City investors move in

0:01 AM, 20th June 2023, About 9 months ago 51

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As small buy-to-let landlords struggle to keep up with increasing interest rates, a wave of City investors is stepping in to fill the gap in the rental market, one property consultancy says.

The firm, JLL, is predicting that within the next three years, the build-to-rent (BTR) sector will double in size, making up 20% of all newly built homes.

The shift towards purpose-built rental properties backed by large pension funds and asset managers comes at a crucial time as BTL landlords face rocketing mortgage costs.

Over the past decade, institutions have poured £32.5 billion into the UK’s BTR sector, primarily focusing on student accommodations and inner-city housing aimed at young professionals.

‘Going to see a shift away from small landlords’

Emma Rosser, associate director for living research at JLL told the Daily Telegraph: “We are going to see a shift away from small landlords and that is going to be replaced with large landlords, the professionalisation of the sector.

“This rising tide of investment has been building momentum over the last decade.”

She adds: “We have come from a buy-to-let model where supply has really been built on debt.

“Now, it is going to be focused on equity. That is possible through very large, multi-billion pound pension funds.”

City investors are better equipped to withstand high borrowing costs

With significant financial resources, these City investors are better equipped to withstand high borrowing costs, allowing them to secure an ever-increasing share of the market as smaller landlords sell-up.

And the latest trend sees investors expanding their reach into suburban housing – a domain once dominated by traditional small-scale landlords.

This rental market shift could potentially reshape the housing experience for tenants and affect the investment strategies of both small and large players.

Make up 42% of build-to-rent homes

By 2025, single-family houses are expected to make up 42% of build-to-rent homes, a significant increase from the 13% recorded in 2022.

JLL predicts that institutional investors will build 88,000 new private rental homes within the next three years.

Although these figures are small compared to the existing rental market of 5.5 million homes, the rapid growth indicates that City investors are building a strong presence in the sector.

The real estate firm says that the financial muscle of City investors could also pose a challenge for BTL landlords wanting to re-enter the market in the future.


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Comments

Dr Rosalind Beck

9:30 AM, 20th June 2023, About 9 months ago

I've got two words for the smug BTR brigade and their tiny percentage of the private rental sector: 'rent controls.'

Simon Orr

9:34 AM, 20th June 2023, About 9 months ago

I have had this thought for years now, the gov wanted to oust PRS so they can then go to the big land lords and expect a huge discount as they will be renting hundreds and want a discount ...and appear to be easing the housing crisis

Tony Johnson

9:34 AM, 20th June 2023, About 9 months ago

All by design to prevent the people owning anything and to destroy small business.
Covid scam was just phase 1.
"You will own nothing and be happy"
Gove is helping the Banks, Investment companies and BlackRock to buy everything up and no doubt trousering a fat % in the process.
Meanwhile the Saudi's and the Gulf states are buying all the commercial assets and the ones left behind by expelled Russian oligarchs.

John MacAlevey

9:42 AM, 20th June 2023, About 9 months ago

20 years ago, HMG panicked average workers into buy-to-let as they suggested that normal pensions would not be the norm. Thousands of amateurs got caught up in the rush to buy, often off plan & unseen. HMG planned this a long time ago as they, collectively, are inept at providing a balance of private & public tenure for the nation. My conclusion is, as usual, press the fear button & panic the people to enable the ugly face of bullying capitalism to come into vision. It seems to happen frequently.

Tony Johnson

9:45 AM, 20th June 2023, About 9 months ago

Reply to the comment left by Simon Orr at 20/06/2023 - 09:34Close but not quite right.
They desperately need housing to put all these migrants in and the PRS is not going to even contemplate allowing undocumented persons from God knows where into their houses to trash or burn them down
By forcing private landlords out they can as you say, pay these city institutions for bulk rental agreements for thousands of properties at a discount, due to economies of scale, with taxpayers money to solve their problem...(at least in the short term that is, since politicians only think short term, i.e to the nextelection cycle.)
The city institutions don't care what happens to the physical property, they still own valuable land for future lucrative redevelopment and the taxpayer will fund all damages and related insurance premiums.

Simon Orr

9:57 AM, 20th June 2023, About 9 months ago

Reply to the comment left by Tony Johnson at 20/06/2023 - 09:45
fair point , given that 75% of migrants are given leave to stay is going to put even further pressure on an already inept system, where are all the hotel migrants going to be living ? my personal thoughts if they already had family members here which a lot claim they should be housed by them?

Dylan Morris

10:00 AM, 20th June 2023, About 9 months ago

Reply to the comment left by Dr Rosalind Beck at 20/06/2023 - 09:30Rent controls won’t apply to the purpose built rental sector. (Just like the proposed ending of fixed term tenancies will not apply to the purpose built student sector).

GlanACC

10:09 AM, 20th June 2023, About 9 months ago

The big city corporations will not want to invest in the rough end of the market, those on LHA payments as too much risk and not enough profit. Housing Associations will not be able to cope either. I have no qualms about selling my remaining properties when my tenants move out. Neither Conservatives or Labour deserve a PRS and neither will relax any rules and regulations or tax. Coupled to this most of our reasonably priced hotels are now fully booked with migrants. I think I will invest in companies making tents.

Dylan Morris

10:13 AM, 20th June 2023, About 9 months ago

Reply to the comment left by GlanACC at 20/06/2023 - 10:09
Or dinghies ?

Darren Peters

10:15 AM, 20th June 2023, About 9 months ago

Reply to the comment left by Dr Rosalind Beck at 20/06/2023 - 09:30
No the BTR old money and pension funds are the establishment - they set the rules

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