Slowly but surely the British residential rented sector looks like it is moving towards the sort of institutional investment structure people have wanted for many years.
The current Labour government – predicted to lose power at a general election within the next few months – says it may introduce stamp duty concessions on bulk purchases in a bid to encourage institutions to buy properties. As it stands today, the UK law insists that such institutional investors would have to pay standard, full stamp duty on every single purchase – a disincentive to bulk buyers.
Reports in the UK suggest that finance companies such as Aviva and Legal & General want to get into the private rented sector, and that the Homes and Communities Agency (a public regeneration body which pump-primes local housing markets) is seeking other big name financial sector investors.
It remains to be seen whether the best vehicle for these players will be a Real Estate Investment Trust (investment to help build a scheme, as exists in many parts of Europe and Asia in particular) or a more all-embracing Build To let concept (where investors fund a scheme and remain central to its rental management, too). But at last it looks as if at least some incentive for these investors is on its way to fruition.
With individual buy to let investors a rarity in these mortgage-restricted days, this kind of institutional involvement is long overdue. Let's just hope that whatever party runs the UK from spring 2010, it creates an environment in which the private rented sector can thrive.
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