Major investors pile in to UK rental homes despite regulatory fears
By Iain Withers and Aby Jose Koilparambil
LONDON, July 12 (Reuters) -Aviva AV.L, Legal & General LGEN.L and M&G MNG.L are ramping up investments in rental homes in Britain, betting on long-term returns in a market where housing demand far outstrips supply, even though the country's new Labour government could impose tougher regulations.
Institutional investment in Britain's rented housing sector is playing catch up, as it accounts for just 2% of the total rented stock, as opposed to more than 35% in Germany and the U.S., according to Savills.
The rented sector - which includes student housing and retirement homes - has fared better than the wider commercial property market, which is facing tough conditions after a period of soaring borrowing costs and changing working patterns.
"Investors are really keen on all these living sectors, it's a bit like the battle of the beds," said Rebecca Shafran, head of alternative residential research at BNP Paribas.
Aviva, L&G, M&G and Royal London Asset Management told Reuters they planned to increase their investments in rental homes in Britain by hundreds of millions of pounds.
Aviva Investors has channelled 750 million pounds into the sector in the last 18 months and wants to triple that within three to four years. The company said its latest deal was with housebuilder Barratt BDEV.L to deliver 101 rental homes in Cambridge.
Potentially stricter rental regulations are a worry but not as much as interest rates remaining higher for longer, Aviva Investors' head of real estate investment, James Stevens, told Reuters.
L&G has been amassing commitments from its insurance business and external investors to increase investment from 2025, head of residential, Dan Batterton, said. Any move towards rent controls needed to be carefully conceived to avoid deterring investors, he added.
Foreign investors are also targeting Britain, with U.S. fund giants PGIM and Blackstone BX.N recently striking big deals. Although PGIM told Reuters comparatively low returns and high construction costs posed challenges.
REFORM BILL
Investors have largely welcomed the new Labour government's pledge to "get Britain building again".
Finance minister Rachel Reeves used her first speech on Monday to promise the government would overhaul planning rules and use the private sector to deliver 1.5 million homes within five years.
But investors are also awaiting details of planned legislation to provide more protection for renters, expected early in the new parliament.
"We have still got the threat of more regulation potentially hanging over the sector, notably rent controls, which would suffocate capital coming into the market," said Rick de Blaby, CEO of build-to-rent developer Get Living.
One large foreign institutional investor, who declined to be named, said it had paused investment decisions on rental homes in London pending clarity on a rent cap policy.
Potentially stricter rental regulations are a worry but not as much as interest rates remaining higher for longer, Aviva Investors' head of real estate investment, James Stevens, told Reuters.
The UK housing ministry declined to comment.
Campaigners say there are compelling reasons for rent controls in Britain linked to inflation and wage growth.
"The market is spiralling clearly out of control, and people are suffering," said Conor O'Shea from renters' campaign group Generation Rent.
PREFERRED SECTOR
Residential was the most preferred sector for investment for European real estate funds as a whole in 2024, data from trade body INREV showed, with the share of their portfolios in homes rising more than three-fold in a decade to 23%.
Investment into Britain's build-to-rent sector hit 2.6 billion pounds in the first half of 2024, according to Knight Frank, the highest since it began tracking the market in 2016.
"The biggest fear at the moment with investors... I'll cut to the chase, is rent caps," said Andrew Screen, head of residential capital markets at BNP Paribas. "I'm a firm believer that if you want to reduce rents, increase supply," he added.
Reporting by Iain Withers in London and Aby Jose Koilparambil in Bengaluru, Editing by Tommy Reggiori Wilkes and Jane Merriman
免責聲明: XM Group提供線上交易平台的登入和執行服務，允許個人查看和/或使用網站所提供的內容，但不進行任何更改或擴展其服務和訪問權限，並受以下條款與條例約束：（i）條款與條例；（ii）風險提示；（iii）完全免責聲明。網站內部所提供的所有資訊，僅限於一般資訊用途。請注意，我們所有的線上交易平台內容並不構成，也不被視為進入金融市場交易的邀約或邀請 。金融市場交易會對您的投資帶來重大風險。
所有缐上交易平台所發佈的資料，僅適用於教育/資訊類用途，不包含也不應被視爲適用於金融、投資稅或交易相關諮詢和建議，或是交易價格紀錄，或是任何金融商品或非應邀途徑的金融相關優惠的交易邀約或邀請。
本網站的所有XM和第三方所提供的内容，包括意見、新聞、研究、分析、價格其他資訊和第三方網站鏈接，皆爲‘按原狀’，並作爲一般市場評論所提供，而非投資建議。請理解和接受，所有被歸類為投資研究範圍的相關内容，並非爲了促進投資研究獨立性，而根據法律要求所編寫，而是被視爲符合營銷傳播相關法律與法規所編寫的内容。請確保您已詳讀並完全理解我們的非獨立投資研究提示和風險提示資訊，相關詳情請點擊 這裡查看。
