Grainger PLC, the UK’s largest listed residential landlord, reported slower private rental growth in the first four months of its financial year but said demand for rental housing is rising as supply from small private landlords shrinks due to tax and regulation headwinds.
The FTSE 250-listed group revealed 3.1% like-for-like rental growth for the four months to the end of January, with a 96% occupancy rate across its private rental sector (PRS) portfolio. PRS rents were up 2.8%.
This compared to 3.6% like-for-like rental growth last year and an average above 4% over the past seven years.
As a sign of demand in London, Grainger said its latest build-to-rent (BTR) development, Seraphina, had been fully let within four months of launch.
A third BTR scheme in Bristol was been completed in the period, while construction on a second site in Guildford in partnership with Network Rail was started, and a first new development was added to the pipeline from a joint venture with Transport for London’s property arm, in Chiswick.
“We continue to see strong demand for our product," said chief executive Helen Gordon. "Our outlook is strong and positive, with market-leading earnings growth to come.”
Grainger highlighted structural support for the rental market from supply being constrained and said it expects to generate further earnings growth from its development pipeline and by recycling capital from lower-yielding, non-core assets.
Broker Panmure Liberum said rental income growth in the PRS portfolio of 2.8% was likely to be seen as a bit weak, but noted that the company has recently guided to increased seasonality, "with summer being the main lettings season and delivering higher growth, as such 2H will likely be reported stronger".
Analysts noted that guidance had been left out of the statement but said it was "a solid, in line statement".