The UK is set to experience a boom in American-style mass-produced rental homes as part of proposals by a consortium that meet a government call for greater institutional investment in the residential market.
Aviva insurance group,is to launch an investment fund with as much as £1bn to buy and rent out swaths of new-build residential property in partnership with CB Richard Ellis property consultancy and a big US residential manager.
The venture will order purpose-built residential blocks of 100 units or more in south-east England to rent out, mainly near big transport hubs and on significant regeneration sites that have stalled because of the economic downturn.
The partners have based their strategy on a US model of large-scale, multi-family rented housing. They say that it will be the first of its kind for the UK, providing thousands of homes for the private rental market, which is dominated by amateur landlords and buy-to-let investors. Rental property is a much bigger business in the US and across northern Europe.
Andrew Appleyard, head of UK specialist property funds for Aviva Investors, said: “We are looking to do something here that has not been done before. We feel that the economics are right given where the market is heading. There is appetite for renting that hasn’t been there before.”
Aviva is concluding an agreement to bring one of the largest US residential managers to the UK to import its professional skills in running a standardised high-quality rental operation.
Large institutional investors have been deterred from making any significant focus on the residential rental market in the UK because of management costs and difficulties in creating a large portfolio, but they have recently been encouraged by the government.
Aviva is working closely on the plans with the Homes and Communities Agency, the government’s national housing body, which in May called on institutions to help galvanise house building and provide quality rental property. The HCA has received more than 60 expressions of interest, and hopes there will be many more similar schemes.
The vehicle, to be launched next month, is expected to be open to investors outside Aviva’s clients, such as other pension funds, and private wealth vehicles. It could eventually be turned into a listed vehicle, such as a real estate investment trust. (FT.com) http://www.ft.com/cms/s/0/f41bbf22-79f5-11de-b86f-00144feabdc0.html
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