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Corporates entering private rental sector could deliver "a dream-shattering blow to many aspiring first-time buyers"

ended 24. June 2024

Last week, housebuilder Berkeley Group announced plans to launch its own build to rent platform, which will be developed over the next ten years, comprising some 4,000 new homes across 17 of the Group’s nature-rich, low-carbon brownfield urban regeneration developments. Newspage asked property experts what the ramifications of growing numbers of corporate landlords could be for tenants, how it could impact house prices and what it could that mean for first-time buyers. Their views are below.

8 responses from the Newspage community

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Rohit Kohli
Director at The Mortgage Stop
This move from Berkeley Group is bad news for renters and homebuyers alike. Big business increasingly entering the private rental sector is going to drive up rents and, with reduced housing stock for sale, send property prices soaring, pricing out even more buyers from the market. It’s a win-win for Berkeley, as this is an unregulated market where they can control the rents and prices. But it’s a dream-shattering blow to many aspiring first-time buyers who desperately want a place of their own.
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Chris Barry
Director at Thomas Legal
A major house builder deciding to either build to rent or purchase existing stock to rent is terrible news for first-time buyers. It should also be a major red flag for Government. Blackrock, other investment companies and the super rich have been acquiring property at a frightening rate over the past few years and the decision from a major developer to do the same will only make things worse. This will mean available stock will reduce and house prices will go up, putting the dream of homeownership further out of reach of first-time buyers. 1.5m new homes over five years won’t make a dent so the future sadly looks like renting will be the norm for many.
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Justin Moy
Managing Director at EHF Mortgages
Larger corporate landlords in the residential market will potentially be bad news for tenants, giving them huge control of rental pricing whilst maintaining a vested interest in keeping property prices high by controlling new build development. As a business model this is becoming popular, with Lloyds Bank already building a similar sizeable portfolio. Sadly, reducing property stock for first-time buyers will only drive prices higher for this ever-suffering demographic.
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Kundan Bhaduri
Property Developer and Portfolio Landlord at The Kushman Group
As professional landlords, we welcome greater competition in the market so this is actually good news. Berkeley Group joins the long queue of corporate, faceless and emotionless landlords who line the streets of Britain, renting their built to rent spaces to eager tenants. This move will actually demonstrate the stark difference in the quality of offering and support, alongside the human touch that professional, human landlords provide their tenants. With property becoming more of a people-centric business, it remains to be seen how the corporate landlords compete with those that work in the business with their own money, because they genuinely want to offer housing as a service, compared to the corporate landlords who will deal with each dwelling and each family living in it as another entry in the spreadsheet. Good, hard-working professional landlords will always welcome competition to demonstrate the differentiated value they bring to the table compared to corporates.
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Samuel Mather-Holgate
Independent Financial Adviser at Mather and Murray Financial
Britain has a major shortage of housing in the rental and owner sector. Having a large house builder entering the private landlord sector may help out short term, but there could be strucural issues in the future. The way to get out of this circle of doom is to incentivise the housing market at every touch point, namely builders, buyers and sellers. A new government could do this and stimulate growth in the sector which would be good for the economy. If Labour get the majority they are expected to, they will have a cushion to do things that will be good for the economy long term, but put some NIMBYs' noses out of joint.
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Dariusz Karpowicz
Director at Albion Financial Advice
Along with Asda and TSB, who also announced their plans to become landlords, this sends a clear message that investing in UK rental property is still seen as lucrative. While it's becoming harder for smaller landlords due to increasing rules and regulations, bigger companies see this as an opportunity to establish a profitable investment. We’ll likely see more announcements like this, but it's not necessarily a positive development for the market. The entry of corporate landlords like Berkeley Group into the rental market could have significant ramifications. For tenants, it might mean more professionally managed properties, but possibly at higher rents. Reduced supply of homes for sale could drive house prices up further, making it even tougher for first-time buyers to enter the market. Institutional money flooding into the rental sector could squeeze out smaller landlords and limit buying options, leading to a more competitive and expensive housing landscape.
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Ben Perks
Managing Director at Orchard Financial Advisers
Berkeley Group are making a bold move to monopolise the rental market, and the next government needs to keep an eye on this growing trend. These large corporates are the ones that should be penalised with tax restrictions, not those people who have one buy-to-let with pension provision in mind. If builders are keeping property for self-gain, it will reduce what’s available to first-time buyers. Whilst it will help with government house building targets, the household crisis will rumble on.
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Simon Bridgland
Director at Charwin Private Clients
Berkeley Group are set to raise the standard of rental homes for 4,000 households. Corporate landlords have a greater amount of scrutiny on the standard and upkeep of property within their control. It could however place more pressure on some landlords in the private rental market to up their game, as many are still lagging woefully behind in the upkeep and general standard of their tenanted properties.