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Investment in the rental market does not compromise homeownership – Marketwatch

  • 08/09/2021
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Investment in the rental market does not compromise homeownership – Marketwatch
John Lewis and Lloyds Banking Group are among some of the larger corporations who have recently invested in the UK’s property market with ventures to rent out homes.


So this week, Mortgage Solutions is asking: With a continued lack of property supply and huge UK firms investing in, building and/or becoming landlords for residential rental accommodation for the first time, what kind of impact might this have on the housing and mortgage markets?



Andy Hutchinson, managing director of Citra Living – Lloyds Banking Group’s private rental arm 

As part of the group’s commitment to helping Britain recover, we aspire to a UK in which all people have access to stable, affordable and safe homes.   

We believe there is an opportunity to support the rental market without compromising the support we provide to homeowners and those aspiring to get on the housing ladder. One in five households in the UK is already in private rental, with demand set to increase over the next five years.  

For an increasing number of people that means renting, but it shouldn’t mean quality is compromised. 

Citra Living is embarking on a first step to provide incremental housing stock for the private rental sector. We are also looking to partner with developers to ensure a consistent standard of properties is available to rent. We want to ensure more people have access to good quality, new-build rental properties, that they can consider their home. 

Lloyds Banking Group remains fully committed to homeownership and has lent more than £9bn to first-time buyers in 2021.  

We are the largest lender to the social housing sector, having provided more than £9bn since 2018 and we are a leading lender and equity provider to UK housebuilders, helping them to build tens of thousands of new homes each year. 


Payam Azadi, partner at niche Advice 

Lenders have always been involved in the private rental sector.  

It gives a sign of confidence that UK property is still a viable entity. When global organisations look at UK residential property, they’ve obviously evaluated it. They’ve got lots of analysts and think UK property is a good bet, that’s not so bad.  

As they are a big corporation, their portfolio is going to be completely different to your novice landlord. It’s a different ball game. Lloyds have a lot of insight into the property. Especially with the acquisition of HBOS, they have a lot of property data so it’s a good sign if they’re coming into it. 

It will be interesting to see what type of housing structure Lloyds will go after. Will they follow Legal and General’s footsteps? Will they have purpose-built units? 

It will be interesting to see what they invest in and the initiatives they approach. That will give a clue as to what areas of the sector are marked for growth. 

What you will see in the UK – and it’s already happening globally – is more large institutions getting involved in the residential market. That often means large complexes with shared living areas, it’s a whole new set up. 

Single buy-to-let properties will go through an evolution. Just like we’ve seen more purpose-built blocks for student accommodation. 

People want all the facilities that come with these properties.  

I don’t think it’ll affect homeownership. I think it’s just Lloyds trying to attract some growth; the average homeowner won’t care that they have a massive stake in the market. We already see that in the commercial market where a lot of pension fund companies own properties. 


Akhil Mair, managing director of Our Mortgage Broker 

There are a few ways of looking at this, both positive and negative. 

The positive is that it shows Lloyds are confident in the UK rental market, they’ve said they’ll buy a large number of units which gives the sector backing.  

It gives other landlords more confidence because they think ‘if a big bank like Lloyds wants to get into this, it must be a good thing’.  

Landlords won’t be upset because although there is a shortage of housing, that was there anyway. Lloyds entering the market won’t disrupt anything. 

On the flipside, rentals could go up and the premiums could go up.  

More buy-to-let landlords are trying to make their portfolios professional including the types of properties they purchase and how they kit them out. This could increase both rental and house prices over time. 

But nothing ever gets cheaper, a can of Coca Cola costs 25p when I was growing up. 

Overall, I think it’s positive, Lloyds are backing the UK property market. They clearly think property is a good asset class to invest in so everyone wins. 


Dan Batterton, head of build to rent at Legal and General Investment Management Real Assets  

The UK needs a high quality residential rental sector that offers flexibility and choice to residents, offering long term occupational security.  

The current private rented sector does not provide long-term certainty to occupiers, but the build-to-rent (BTR) sector does. Traditional build-to-sell developers produce 150-200,000 homes per year.  

The growth in the BTR sector is not reducing the amount of homes being built by build-to-sell developers. A new business model and more capital is allowing for more homes to be built, BTR is providing net additional homes.  

In the UK, we are roughly building 100-150,000 homes less than we require per year.  

BTR is bringing new capital from long-term pension fund investors to support the building of homes. BTR will not bridge the shortfall of homes required but is adding to supply which will help with the acute shortage of homes.  

Homeownership is not the only answer, it is one form of housing tenure that is right for some but not for everyone. Renting can be a positive aspirational choice and BTR is trying to deliver this through purpose-built homes with a great service.  

Of our c. 2,500 occupiers, when questioned, only one third would buy a home if they could afford to. They were renting because they wanted to, because it suited their lifestyle at the time. It may not suit them for their entire life, but it does at some points.  

It is simply wrong to assume everyone wants to own a home, but it is absolutely right that people want a choice and BTR can make renting a positive choice. 


Jeni Browne, director of Mortgages for Business

Big players such as John Lewis and Lloyds Banking Group investing in the private rented sector is certainly good for local tenants who can’t afford housing and have to rent. Frankly, anything that increases the number of homes in the UK is in the greater interest in the housing market.

John Lewis has unveiled plans to build 10,000 homes for rent over the next few years – roughly 7,000 of the homes are to be built on sites already owned by John Lewis, ranging from studio flats to houses. That should be applauded.

Will it make a big impact on the market? Perhaps locally. Supply and demand suggests it will be significant at some level. More rental options means more competition, and that should mean less upwards pressure on rents, making renting a more attractive option. And, theoretically, that should help potential first time buyers save to get on the housing ladder.

But on a wider national-scale, this poses no threat to standard buy-to-let landlords; until the government sorts out the housing shortage and materially increases the volume of the stock of affordable homes, nothing is going to seriously affect the demand for property to rent.

Residents of John Lewis’ estate will have the option of renting flats furnished with John Lewis products and all developments will include a Waitrose convenience store near the entrance – John Lewis clearly isn’t focusing on Lidl shoppers, are they.

In fact, private landlords should probably take heart. You are judged on the company you keep and – unlike other investors entering the sector – you don’t get more bluechip than John Lewis and Lloyds. Afterall, they have reputations to uphold that large private investors don’t have to worry about.

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