Private equity firms and pension funds are increasing their investments in the UK rental market, spending a record £1.5bn on single-family homes by the end of last year.
The UK’s institutional players, such as Aviva, Legal & General, and Lloyds, have been joined by global giants like Blackstone, the world’s largest real estate investor. Since late 2023, Blackstone has acquired 4,500 homes from Vistry in deals totaling £1.4bn. It now oversees 17,000 residential properties in the UK.
The surge is driven by rising rental demand and a worsening housing affordability crisis. Investors are shifting their focus toward single-family homes instead of multi-family developments. These properties attract stable, long-term tenants and are simpler to build under the UK’s restrictive planning regulations.
Savills reports that 54% of rental investment in the year up to September was directed toward single-family homes, a significant rise from 32% the previous year and just 5% in 2019. Nearly 5,000 of these properties were purchased in the first three quarters of 2024, a 20% increase compared to the same period in 2023.
According to the Financial Times, institutional investors own just 3% of UK rental homes, compared to 37% in Germany and 41% in the US. This raises concerns about affordability and market control. In addition, they have been purchasing unsold homes from housebuilders facing weak demand, often at discounts of 15–20%.
Some private equity firms are amassing rental home portfolios to sell to pension funds, which seek steady income. For example, Blackstone sold 3,000 shared ownership homes worth £405m to the UK’s largest pension fund, Universities Superannuation Scheme.
Source: Elite Agents
Can’t stop reading? Read more
Insignia’s $2.9bn valutation sparks market shift amid private equity bidding war
The latest $2.9bn bid for Insignia Financial validates its long-held belief that the wealth giant...
Private Equity industry to lobby Trump for access to retirement funds
Private equity executives and lobbyists recently told the Financial Times that they are prepared...
GFL to cut $5.59bn deal with private equity firms Apollo and BC Partners
GFL Environmental announced on Tuesday that it will sell its environmental services division in a...