Firms boost their investment in PRS

Many large institutional investors in property have seen a downturn since the pandemic in their commercial property portfolios and some have refocused their sights on investment in the private rented sector (PRS).

In the last month some of these plans seem to have accelerated significantly, but is this the boost that the PRS needs to help balance the current issues being faced with supply and demand of this much-needed housing or could large investors dominate the sector for the wrong reasons.

John Lewis is one such organisation, after they announced last year that they would look to enter the PRS, they have now identified their first locations. These are existing John Lewis and Waitrose shops and warehouses which will be converted to residential accommodation and the sites form part of their plans to provide 10,000 homes in the next decade and signal a significant diversification from retail.

According to the company, the accommodation ‘would offer the trust, quality and service that people expect from John Lewis’ and employees will potentially benefit from discounted rates if they rent the properties.

The high street retailer Boots is another household name that has also announced plans to venture into PRS with a proposed housing development on its land at their headquarters in Nottinghamshire. The plan is for over 500 houses and over 100 apartments to be built and let, if planning permission is granted.

Lloyds Banking Group, through its management company Citra Living, is also buying into the PRS with a recent purchase of over 100 properties at a development in Ashford, Kent which follows a previous investment in a similar type of development in Peterborough last year. They are looking to expand to further locations and will include one-bed apartments through to family-sized homes and the sites all form part of the bank’s target for 50,000 homes by 2030.

This is an incredible target for one organisation and some industry commentators believe it to be overly ambitious, but if achieved it would make Lloyds one of the country’s largest private rented sector landlords.

Without doubt private rented sector property is needed, as we at Pennington know too well from the high demand we have from prospective tenants. I always welcome investment into our sector, but I do hope that having such large corporate investors as landlords will help the PRS over the long, long term. The pandemic has brought this into the forefront with the shift from investment in commercial property to PRS, so the next couple of years will be telling how it starts to play out.

If you need any advice on this or would like to discuss any other matters on the local property market, please do not hesitate to contact me.