Pension funds sought to build rental housing
Published: 12 May, 2009
LONDON: Plans to encourage pension funds to invest in private rented housing have been unveiled by the Homes and Communities Agency (HCA) in what is a major lobbying victory for the British Property Federation (BPF).
The Government’s recently-formed ‘super agency’ is responding to a two-year campaign led by the trade body to shift housing policy towards rental.
Around eight organisations have reportedly been in talks with the HCA over building rented accommodation in a bid to support builders during the housing market recovery.
They are rumoured to include two institutions, two housing associations and one or two 'big name' pension funds. The project could see thousands of new homes being built for long-term rent
The BPF and its members have welcomed the move. They called again on Treasury ministers to make a major stamp duty fix to encourage investment.
Changes were set to be made in the Budget. This would have allowed big investors to pay the same amount of tax on bulk purchases as they would on individual units. It would also have provided much needed encouragement to pension funds to pump millions of pounds into building new homes.
Peter Cosmetatos, BPF director for finance, says:“One positive factor to emerge from the current downturn is that the fall in property prices has made the yields offered by residential property much more attractive. There is a rare opportunity at this point ifor institutional investors to invest in an asset class that provides an excellent hedge against inflation at a good price.”
Nick Jopling, head of residential at CB Richard Ellis, says: “With the future of public funding looking bleak, and buy-to-let not likely to expand at the same pace, it’s essential we look at alternative sources of finance for housing.
"A well-managed, large-scale rental sector would enhance our social mobility and provide greater security for many caught between social housing and ownership.
"The Treasury’s decision to remove stamp duty changes from the Budget was nonsensical. We urge ministers to look again at this measure."
Rupert Dickinson, chief executive of Grainger plc, the UK’s largest listed residential landlord comments: “This is a real opportunity to develop the professional rented sector, delivering a new and badly needed source of housing.
"Build-to-let is an idea whose time has come and we look forward to working with the HCA and investing institutions to turn it into reality."