Thousands of rental homes hoovered up by US giant in bet on Britain’s housing shortage

homes

US private equity giant Blackstone has agreed to acquire a raft of new homes across the UK as it looks to cash in on soaring rents.

Up to 1,750 homes have been snapped up by Blackstone after it struck a £580m deal with developer Vistry.

The agreement is Blackstone’s second with Vistry in less than a year as it pushes further into Britain’s rental sector.

So far it has agreed to spend £1.4bn on more than 4,500 homes across the UK, supported by its investment partner Regis.

It is the latest sign that Britain’s rental sector is attracting greater levels of investment from private equity groups and pension funds.

The likes of Aviva Investors, Legal & General and Axa have all recently piled cash into the so-called build-to-rent sector, building rental properties to be managed long-term by institutional funds rather than buy-to-let landlords.

They are looking to capitalise on the extreme imbalance between supply and demand across Britain’s rental sector, which has been fuelled by private landlords selling up just as high levels of immigration push up demand.

National rent growth peaked at a record high of 9.2pc in March, before cooling to 8.9pc in April, according to the Office for National Statistics (ONS).

However, price rises have been even more extreme in London, with rents climbing by 10.8pc year on year in April.

Previously, investment in the build-to-rent sector was concentrated heavily on blocks of flats in cities that were let out primarily to graduates or white-collar workers.

However, funds are focusing increasingly on rental homes in suburban locations, targeting families unable to buy.

Blackstone’s deal with Vistry is for a portfolio of homes concentrated in the South East of England.

It will be managed by Leaf Living, which was set up by Blackstone in 2021 to manage single-family homes to rent.

James Seppala, head of European Real Estate at Blackstone, said: “Institutional private capital can play an important role in providing high-quality housing stock across the UK, particularly in the private rented sector which is significantly undersupplied today.

“Partnerships such as these can meaningfully accelerate the delivery of new homes and help alleviate structural undersupply across the sector.”

The first homes will be completed by the end of June this year, with the majority finished within the next two years.

Blackstone manages more than $1 trillion in assets and is the world’s largest alternative asset manager.

Single-family homes are the fastest-growing part of Britain’s build-to-rent sector in terms of investment.

While investment in build-to-rent flats roughly halved between 2021 and 2023, shrinking from £4.6bn to £2.6bn, investment in single-family homes nearly doubled from £1.1bn to £2bn, according to analysis by JLL property consultants.

In the first three months of this year, single-family homes accounted for the largest share of investment in the build-to-rent sector.

Investors piled £620m into build-to-rent family homes, £170m more than they spent on build-to-rent flats.

The single-family build-to-rent sector is expanding at a time when overall housebuilding has slumped, as high mortgage rates squeeze demand.

In the last three months of 2023, the number of starts on new homes slumped by 51pc year-on-year to 19,080, government data showed.

Greg Fitzgerald, chief executive at Vistry Group said: “By working in partnership with organisations like Leaf Living we can maximise the number of high-quality homes we deliver every year.

“This year we are on track to deliver more than a 10pc increase in new home completions, playing a key part in helping to address the UK’s acute housing shortage.”

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