Landlords face potential competition from institutional investors

The latest potential headache for landlords is the potential that institutional money enters the buy-to-let market increasing the competition amongst landlords to secure tenants. This could be the case according to Property Week who have reported the plans of the newly formed Homes and Communities Agency looking to secure institutional backing for a push into private rental markets.

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The talks are thought to be only at a very early stage and are based on how a private rented sector fund model could be structured and what the costs associated with it would be. Cost assessments would include how rental streams are guaranteed and how void and management costs are handled.

This attempt by the Homes and Communities Agency is one of a long line of failed or shelved initiatives by various governments to secure greater involvement and funds from the private sector. The reality is that each time schemes have failed because governments were unprepared to take a long-term view or grant the institutions sufficiently attractive terms such as tax relief to make the investment an attractive one. This, combined with the fact that institutions perceive investment as 'messy' and with certain amount of political risk has meant that involvement by investing institutions has always been small scale and patchy.

Property Hawk comments
Property Hawk has no problems with government incentivising the private sector to provide rental housing. What we would say to government. Make sure that you don't discriminate against the small guys. After all much of private rental housing is provided by small scale landlords and the sector now contributes over 12% of the housing in the UK. That ain't to be sniffed at.


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