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 11 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

NewYorkie

10:24 AM, 21st June 2023, About 11 months ago

Reply to the comment left by Dennis Forrest at 20/06/2023 - 22:11
I'm not arguing against holiday letting. As I said, I had one many years ago, and all the same justifications you raise, were just as valid then... as were the counter arguments. Where it differs today is the scale of Airbnb et al in the large cities, and traditional landlords who are using it instead.

My point is, I've decided against holiday letting, because I believe it's next on the target list.

Rob Thomas

19:41 PM, 22nd June 2023, About 11 months ago

Reply to the comment left by Old Mrs Landlord at 20/06/2023 - 13:25
I agree that government is doing all the things you say and are hugely disadvantaging small landlords catering to students. What I don't understand is why politicians seem to fail to see that eliminating the small landlords will make university accommodation unaffordable for most students.

Both my son and daughter have benefited from cheap accommodation at unversity provided by small landlords. God help future generations if these landlords are driven out by politicians who won't listen.

Darren Peters

19:54 PM, 22nd June 2023, About 11 months ago

Perhaps they don’t want ‘most students’ going to university. Or they want them indebted for both expensive courses and expensive accommodation

Christopher Lee

21:40 PM, 22nd June 2023, About 11 months ago

Reply to the comment left by Darren Peters at 22/06/2023 - 19:54
I think councils and the govt just don't want swathes of untidy houses paying zero council tax.

Jim

7:54 AM, 24th June 2023, About 11 months ago

Reply to the comment left by Dr Rosalind Beck at 20/06/2023 - 09:30
Good to see you back on Property 118
The build to rent companies will get around any rent controls by the Government introducing "Rent pressure zones" as they have done in Ireland. https://www.irishtimes.com/business/economy/report-claims-rent-controls-have-backfired-and-worsened-crisis-1.4881856#:~:text=The%20study%20by%20economist%20Jim,is%20no%20longer%20economically%20viable.

Badger

11:26 AM, 24th June 2023, About 11 months ago

Reply to the comment left by Dr Rosalind Beck at 20/06/2023 - 09:30
I wouldn't put it past the government of the day to give them a by on rent controls. 🙁

Absent the imposition of rent controls however, I don't see how the BTR brigade can compete.

AFAICS, the rents that they demand for their new builds are always significantly ahead of the local individual landlord prices.

dolly day dream

11:51 AM, 24th June 2023, About 11 months ago

the govt want a million aire land lords club only they dont want single property landlords i wonder hpw many politicians rent out multiple properties and how many have formed a limited company, the bigger the man the bigger the fiddle

dolly day dream

11:54 AM, 24th June 2023, About 11 months ago

Reply to the comment left by Tony Johnson at 20/06/2023 - 09:45
privately owned council estates paid for by the tax payer, sounds about right

Christopher Lee

12:55 PM, 24th June 2023, About 11 months ago

Reply to the comment left by john thompson at 20/06/2023 - 19:07
But where's better?

Bernard Mealing

17:09 PM, 5th July 2023, About 11 months ago

Let's put all this into a few words.

POLITICS.

Poly means more than one. and Tic's are blood suckers

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