(Bloomberg) -- One answer to the UK’s housing crisis lies in attracting more institutional capital, according to the boss of one of the country’s largest rental landlords.
While the new Labour government’s planning reforms aimed at boosting supply are welcome, the UK remains a laggard when it comes to delivering rental housing with funding from money managers, Bob Faith, Greystar Real Estate Partners LLC founder said in a Bloomberg Television interview.
“In the US, 40% of the rental housing is owned by institutions,” Faith said. “That’s 3% in the UK. That’s what the huge opportunity is to really bring institutional capital in to help solve the problem.”
Labour has pledged to make more land available for development as part of its housing reforms, which it argued during the July election were a way to accelerate UK growth and generate revenue for cash-strapped public services. About a fifth of households in England rent in the private sector, official data shows.
Greystar, which manages more than $78 billion of residential real estate globally, is among the largest rental owners in the UK. Faith said the company has been working with the Labour administration “to try to help them understand what it is going to take in order to solve the supply problem.”
A surge in UK rents in the aftermath of the pandemic is now slowing, while the number of international students applying for UK universities has dropped as a result of clampdowns on visas. Property values have also come under pressure from higher interest rates, which have stressed some landlords with loans coming due. But Faith dismissed those risks as minor blips, arguing the long-term fundamentals for rental housing remain solid.
“As we see interest rates start to come back, that cost of capital, you are going to start to see new development,” Faith said. “What happened with rates going up, you saw the new supply pipeline really slow down, which has made the supply-demand imbalance even worse.”
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