Cashed-up pension funds and asset managers will replace smaller-scale buy-to-let landlords in the UK rental market in the coming years, according to new research from real estate company JLL.
Twelve successive interest rate hikes from the Bank of England, with the likelihood of more to come, are forcing private landlords out of the market, with The Telegraph noting that landlords face up to a 200% rise in payments when refinancing their properties this year.
As a result, the private renting sector could see a net loss of 37,000 properties this year alone.
JLL predicts that City investors will see this as an opportunity to double the build-to-rent sector over the next three years, to account for 20% of all new homes built.
Traditionally focused on student accommodation and urban housing, Institutionally backed build-to-rent investors are beginning to encroach further on the suburban housing sector.
Researchers predict that single-family homes will increase to 42% of the sector in 2025, up from just 13% in 2022.
“It all points to a big shift,” said JLL’s associate director for living research Emma Rosser, continuing: “We have come from a buy-to-let model where supply has really been built on debt.
“Now, it is going to be focused on equity. That is possible through very large, multibillion pound pension funds.”