Record £1.5bn invested in UK rental market by private equity firms

Jan 9, 2025 | News | 0 comments

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.

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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

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