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Grainger boosted by rising rental income as Britain’s largest private landlord ready £300m in record spend on build-to-rent properties
- Grainger reported like-for-like rental growth of 6.1% for the four months to January
- The FTSE 250 company has a £1.8bn pipeline to build around 7,000 additional rental properties
- Demand for rental properties in the UK is increasing amid a sharp rise in mortgage payments
Residential developer Grainger has welcomed a great start to the financial year due to strong demand for private rental properties in the UK.
The Newcastle-based company, Britain’s largest private landlord, recorded like-for-like rental growth of 6.1 percent for the four months ended January, almost double the rate for the same period last year.
The property portfolio in the private rented sector reached a record occupancy rate of 98.7 percent, up 1.7 percentage points from February 2022, when customer demand reached near-unprecedented levels.
Strong results: Grainger reported like-for-like rental growth of 6.1 percent for the four months ended January, nearly double the rate for the same period last year
Coming off its best annual performance ever, the group said it expects to maintain momentum in 2023.
It is investing a record £300 million to deliver 1,640 owner-occupied homes in seven English and Welsh cities.
This is part of a £1.8bn pipeline to provide approximately 7,000 additional rental properties, of which more than 3,600 are fully funded, to the existing portfolio of 10,000 homes.
Under one joint venture partnership with Transport for London in 2019, the company will develop more than 3,000 homes in eight locations in the capital, some of them on existing metro stations.
Grainger CEO Helen Gordon said the partnership ‘continues to go exceptionally well’, with four plans to build around 1,240 new homes in Southall, Nine Elms, Arnos Grove and Montford Place in Kennington having received full planning permission.
Demand for rental properties in the UK is booming amid a surge in mortgage costs due to successive Bank of England rate hikes and a disastrous mini-budget from former Prime Minister Liz Truss.
At the same time, the supply of new rental properties is being stifled by tight planning laws and more landlords exiting the market, due to the introduction of new regulations and tax changes in recent years.
Landlords can no longer deduct costs such as mortgage interest from their tax assessment and must pay a 3 percent stamp duty surcharge when purchasing a second home.
These factors have contributed to average rents rising to an eye-watering £1,172 a month, and almost £2,000 a month in London, according to the latest figures from insurance company HomeLet.
“Based on our continued strong rental growth, supported by demand for private rental properties, and our significant progress in investing in and delivering new rental properties, we are confident to continue our strong operational performance,” the company noted. .
Founded just before World War I, Grainger offers American-style residential complexes where tenants can enjoy other services ranging from concierges to gyms, gardens and movie theaters.
Grainger shares were up 2.1 percent on Wednesday morning at 262.8 pence, though they’re still down 13 percent over the past 12 months.