Making Institutional Investment in the Private Rented Sector Work

With one low to middle income family in four shut out of home ownership, there is an urgent need for high quality purpose-built rental homes offering more secure tenancies than typically found in today’s buy to let sector.

In a context of significant cuts to public investment in housing, the Resolution Foundation proposes that new build-to-let developments could be funded by institutional investors, such as pension and life funds, and has developed a financial model for debt and equity investment in the private rented sector in collaboration with the Royal Bank of Canada (RBC). Given that investors are often reluctant to invest in the development phase to get rental schemes up and running, the report foresees a role for registered social housing providers in kick starting build-to-let developments by building new units which could then be sold onto an investment fund enabling social housing providers to build further new homes.