Legal & General Capital and the Dutch pension fund, PGGM, have launched a build-to-rent partnership which will initially invest £600 million in purpose-built private rental housing across the UK, providing over 3,000 homes.
The partnership aims to help tackle the UK housing crisis by increasing the supply of new homes. The first 650 homes will be built in Bristol, Salford and Walthamstow and a yield of 3-5% on completed assets is planned. According to the two partners, the UK is lagging behind the USA and Europe in developing an institutionally funded and managed rental property market. By developing a UK institutional rental market, it is hoped that it would help control rents and improve the quality of rented accommodation.
Mathieu Elshout, investment director real estate, at PGGM, commented: “Investing in residential is the perfect long-term real estate investment, as it creates a relatively high income security and diversification relative to other sectors. The partnership allows us to build and maintain good quality residential assets in the UK at scale, with a high degree of control over our investments.” PGGM has around £3 billion in residential investment exposure through its strong strategic partnerships in the Netherlands and the US and has invested in build-to-rent for over 40 years.