There has been a battle raging to “Save the High Street” for a number of years, but has the high street found a new way to help save itself?
Recent announcements have shown a shift in the buy-to-let market with banks and retail giants eyeing up property investment as a possible revenue source. Insurance companies and fund management groups have led the way in recent months, with Legal & General investing in 80,000 affordable homes over the next decade, and M&G investing £6bn to become the next for-profit social landlord.
Now Lloyds Banks have joined the party with reports suggesting they are aiming to buy 50,000 properties by 2030, and John Lewis converting unused floor space in its department stores into rental properties to create new streams of income.
No one can deny there has definitely been a shortage of housing and a rise in families renting in the UK so it should not be a surprise that corporate investment in the rental market is looking like a very attractive opportunity.
With 250-300,000 units needed to be built each week, it is easy to see the demand is a driving force, but after such a period of instability, the diversification of income sources is a must for any company looking for stability.
At a time when interest levels are at record lows, and projections from Lloyds Bank’s investment arm Citra Living have indicated that after investing in 10,000 homes, it will have a balance sheet worth around £4bn and create approximately £300m pre-tax profit, the confidence in the returns from the private rented sector is at an all time high.
According to BellPepper Investments Founder Donovan Waite, it is easy to see why these corporates are attracted to property investment.
“Banks like Lloyds are seeing the stable returns from the property investment sector and the ability to achieve economies of scale on management, as well as the superior information benefits of being a major lender.”
“Rental growth is arguably an inflation hedge and corporate landlords do present another level of professionalism for the tenants compared to many buy-to-let landlords, but an eye must be kept on whether their own mortgage customers will now be left having to compete with the bank they borrowing from.”
As more and more large companies enter the private rented sector, will property investment prove to deliver the profit they are searching for?
Read more about Lloyds Bank recent announcement here: Lloyds plans big move into UK rental market with 50,000 homes