Labour’s Housing Plans Could Hand Over Profits to Global Investors, Says Thinktank Report
The UK’s booming build-to-rent (BTR) sector is quickly becoming one of the most lucrative markets for corporate landlords, many of whom are backed by overseas private equity firms, a new report warns. With BTR developments accounting for one in five new homes and almost 30% of new properties in London, the report from the Common Wealth thinktank highlights concerns that the Labour government is relying heavily on these profit-driven investors to solve the housing crisis.
The thinktank’s report, Open for Business or Up for Sale, reveals that four of the five largest BTR developers are supported by private equity funds, and many are based outside the UK. As part of Labour’s housing strategy to build 1.5 million new homes, large corporate landlords could be allocated significant tracts of land for development in 12 planned new towns, potentially delivering up to a fifth of the expected 10,000 homes per town.
However, this rapidly growing sector has become more focused on housing for singles and couples rather than families. Around 90% of BTR homes are rented by individuals or couples, with a large proportion of these properties attracting higher-income households. In contrast, the private rental sector as a whole has a much higher percentage of family households. Cities like Manchester, Birmingham, Leeds, and Wakefield have the highest concentrations of BTR properties, which often cater to those earning over £68,000 a year.
While some developers argue that BTR provides much-needed homes and speeds up the delivery of amenities in new communities, critics point out that corporate landlords have a tendency to release properties gradually to maintain high rental prices. The report also highlights concerns that private equity-backed developers are more interested in profits than in addressing the affordability crisis that the government has committed to solving.
In response, the thinktank urges the government to regulate the profits made by BTR developers, particularly on public land, to ensure that the housing market remains accessible and fair to all.
The debate continues over whether these corporate-backed developments are a solution to the housing shortage, or if they are simply exacerbating the problem by prioritizing profit over the needs of families and affordable housing.
