Legal & General Capital have teamed up with PGGM, a pension fund manager based in the Netherlands, to launch a UK Build to Rent Partnership. Such schemes have become well funded and managed in the United States and continental Europe but remain untested in the UK. Three schemes will kick off the new project with new apartments being developed in Bristol, Salford and Walthamstow.
The key element which makes this approach stand out is scale. With high property prices and an under-supply of rental properties, tenants are having to make do with high cost, but low standard homes. The Build to Rent project is seeking to rapidly increase the supply of privately rented properties, which in turn the number-crunchers calculate will create an attractive investment opportunity.
If the new apartments can be delivered at a rate which is swift enough to really start to dent the supplyside problems which are driving up prices then surely this is a model which other financiers and developers will look at. There has been relatively little disruption in what has been a troubled market place, but innovations of this nature are certainly worth watching. It is also very easy to see such Build to Rent forming a part of the Government's vision to regenerate former public sector land for new homes.
The ambitions of the UK Government are for a nation of homeowners, but those around Whitehall will be looking at a growth in quality private rental accommodation as one important step towards tackling the housing crisis.