Build-to-let promises new investment in rental sector

Permalink: Build-to-let promises new investment in rental sector
by Gill Montia

Predictions that property investors will turn away from the buy-to-let market as the prospect of capital growth from house price inflation diminishes, have prompted the Government to look at other ways of bringing private money into the rental sector.

Politicians are currently considering build-to-let schemes, which would be funded by the private sector and provide professionally-run rental accommodation.

Grainger, the UK’s largest residential property owner, and Unite, which develops privately-managed student accommodation, are both reported to be interested in the build-to-let market.

Projects would be funded by investors buying shares in property companies, or investing in property funds.

With the UK’s leading housebuilders under pressure from the credit squeeze and the slowing property market, the Government will be hard pushed to meet its ambitious targets on new homes.

Build-to-let could prove a promising alternative because it has the potential for strong capital growth and properties built with lettings in mind can generate high yields.

Mark Allen, chief executive of Unite, explains: “If a block is designed to be let, developers can increase the density and make it more attractive to investors. It can be built to deliver a higher yield, more akin to commercial property.”