Pension funds urged to build and run flats to rent
Pension funds and large scale investors are being urged to invest in building new homes for rent - leading to large private landlords becoming commonplace.
An initiative led by the Homes and Communities Agency (HCA), the national housing and regeneration agency for England, is looking to create investment opportunities in property and in particular the private rented sector on a large scale.
It is hoped building and running such properties could represent a low-risk and longer-term investment - with any property price rises providing capital growth along with income from rents.
The HCA's initiative is also looking at larger investors to plug the investment gap in building created by the recession and preceding credit crunch.
Sir Bob Kerslake, HCA chief executive, said: "Our initiative is one of many innovations we have used to attract new investment, kickstart stalled housing schemes and mitigate against the effects of the market downturn.
"To date, achieving scale has been one of the main barriers to attracting institutional investors into the housing sector. We believe there is an opportunity now for the HCA to work with developers and housebuilders to offer a pipeline of projects for the PRSI, which could result in a positive outcome for all stakeholders."
He added the HCA will be working with the private sector to develop products attractive to investors.
"Projected rental yields and the current market suggest that the time is right," he concluded.
The British Property Federation (BPF), which has lobbied hard for larger investors to become involved in the rental market, said eight large investors - including housing associations and major pension funds - are in talks with the HCA.
Ian Fletcher, BPF residential director, said: "It's great that policymakers are alert to the need to continue to expand the private rented sector and support development through these difficult times.
"But it's vital we look at what we can do to make the numbers stack up. It's now or the never for the professional rented sector and it's essential that ministers do not loose sight of the opportunities here."
Chris Balch, director, retail property adviser DTZ Consulting, added: "The housing bubble we've been living in has burst and the need for new investment vehicles and new products is clear.
"The success of the professional rented sector will depend on investor support, but with the political support we now have there is every possibility that we can start to build a home rental market to match our European and American neighbours."
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