Build-to-rent developer Grainger has seen impressive growth thanks to a supportive government and the battering of smaller private landlords.

The property giant’s net rental income grew 15% in the four months to the end of January, and it expects earnings to grow by 50% in the medium term “through the delivery of our committed build-to-rent investment pipeline”.

Grainger operates 11,100 rental homes and has a £1.4 billion pipeline of another 5,000 build-to-rent homes, with new schemes opening in Oxford, London and Bristol this year.

It explains: “The fundamentals of the UK residential rental market remain exceptionally supportive, as demand continues to grow, and rental supply continues to be constrained as small, private landlords face increasing headwinds. The regulatory backdrop is accelerating this trend, whilst we also have seen an increasing number of positive statements in support for build-to-rent from the UK government.”

Grainger adds that PRS rental growth remains at good levels, with very strong demand for its mid-market product and “excellent customer service”, while occupancy remains high (96%) and in line with expectations.

The UK government has recently pledged to support homebuilders by reducing planning regulations and closing the construction skills gap.

Concerning

Total Property’s CEO, Eddie Hooker (pictured), says rising costs, increasing regulation, and shifting tenant expectations are reshaping the market.

“What’s particularly concerning is that the vast majority of landlords have been in the market for over a decade, while new investment has slowed to a trickle,” adds Hooker. “The fact that so few new landlords are entering the sector is a clear indicator of where the market is heading.

“While strengthening tenant rights through increased regulation is vital, on the other side of the coin, landlords have little incentive to reinvest in the market under current conditions.”

Main pic credit: Grainger PLC