May

BlackRock isn’t buying your street. The truth is actually far more disturbing.

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Property118

BlackRock isn’t buying your street. The truth is actually far more disturbing.

There’s a growing narrative that giant institutions like BlackRock are buying up Britain’s suburban housing stock and pushing ordinary renters out of the market, but the reality is more complicated, and arguably more worrying.

The large institutional funds are not the slightest bit interested in your average three-bedroom semi, ex-council flats, or the ageing Victorian terraces. They’ don’t seem to be too excited about building houses with gardens for young families either. What they want are modern, ‘cookie cutter’, purpose-built apartment blocks in major cities. The type of property that appeals to younger professionals without children and with incomes around the higher rate tax bracket.

If that’s the lifestyle you want for now and you’re able to afford to live in one of those properties, then you can expect concierge desks, resident gyms, co-working lounges, app-based maintenance reporting and professionally branded living environments. Now all of that might sound wonderful if you are a young professional earning good money in a major city, because there is a growing supply of high-specification Build to Rent accommodation aimed directly at you.

That is the Build to Rent sector.

Meanwhile, government policy has systematically increased pressure on smaller landlords through income tax, higher SDLT surcharges, tougher EPC proposals, expanding compliance obligations, and the Renters Right Act, to name just a few!

Increasingly, and we see this every week through the work we do at Property118, rental properties that are not being sold are being diverted into emergency and temporary accommodation contracts operated through outsourcing providers such as Serco and similar organisations. That changes the nature of the rental market completely, because the landlord who owned three houses locally, knew the tenants personally, and answered the phone when the boiler failed, is gradually disappearing from many areas.

The result is that if you are a family on an ordinary income looking for a three-bedroom suburban house with a garden near decent schools, you have an increasingly worrying problem. There are still some landlords in the market, but pressure on their costs of compliance combined with a huge surge in demand is sending rents stratospheric. Some say that rent caps would fix that problem, but the reality is that it would simply reduce supply as more landlords choose to sell up while others decide that letting to the likes of Serco to house asylum seekers is the better option. The latter creates other problems such as racism, and that impacts Policing costs, and all the while our elected leaders act like the three wise monkeys.