While the Government has trumpeted its pledge to turn our green and pleasant land into a building site in order to sort out their housing shortage, there is a less-publicised issue that is pushing up rents and squeezing availability.
Average rents rose by almost 9% to December 2024 according to the Office for National Statistics. While Rightmove predicts a 3% rise is more likely to prove sustainable this year, the rental market remains a solid option for large-scale investment. This is even more attractive given that London property portals claim that properties were let out 20% faster in 2024 than in 2019. Meanwhile, Zoopla guides investors by providing figures that detail ‘hot property’ areas up and down the UK, ready for investors to swoop.
Rental property is propping up pensions, not in the traditional sense of providing extra monthly income to individual small-scale landlords, but on a vast scale in that pension companies and private equity firms have seen a massive opportunity and are investing their funds in the UK rental market. These companies are acquiring huge property portfolios in the knowledge that they will provide a steady income combined with long-term growth – on a massive scale. Last year, investors spent £1.5 billion on single-family homes alone.
A further trend to watch is private investment companies bulk-buying unsold and discounted properties from housebuilders, which is evolving into partnership between developers and private equity firms.
As the Government’s divisive ‘Renter’s Rights’ Bill works its way through Parliament, many small-scale landlords are choosing to sell up. In their place, UK companies such as Legal and General, Lloyds and Aviva have been joined by some major global names, including property giant Blackstone.
Blackstone, originally a US-based real estate company owned by multi-billionaire Steve Schwarzman, has spent £1.4 billion in the UK and manages 17,000 residential properties. It recently sold 3,000 shared ownership homes worth £405 million to the Universities Superannuation Scheme. To give an indication of the scale of Blackstone’s investment potential, it claims to be “Europe’s biggest landlord, with over $100 billion in assets, half of which is in warehouses, distribution facilities and fulfilment centres”.
So, is your pension profiting from rental property, and, if you are renting, is your castle in ‘England’s mountains green’ really a Trojan Horse?