Legal & General Capital and Dutch pension fund manager PGGM have announced a new partnership that aims to deliver 3,000 new build-to-rent homes around the UK.
The partnership aims to invest an initial £600m, and has been seeded with three existing L&G developments in Bristol, Salford and Walthamstow, while it is in discussions for a number of other sites.
“The UK rental market, compared to the US and Europe, is dysfunctional, with ever increasing rents and increasingly poor accommodation,” said Paul Stanworth, managing director of Legal & General Capital.
“For this to change, and renting to become more affordable, we need to invest in the ‘new’, and build new homes to rent, and just stop inflating the prices of old housing stock.”
LGC said it aims to disrupt the UK rental market by investing long-term institutional money to develop a new UK rental market.
Dutch pension fund provider PGGM has £138bn of assets under management, and more than 40 years’ experience in the residential market. It owns close to £3bn of residential investment exposure through its strategic partnerships in the Netherlands and the US.
In both countries, the institutionally backed PRS is far more developed, allowing PGGM to bring its experience to bear in the market.
LGC has worked with PGGM before, announcing a £375m partnership last year that would invest in the London office market.
“Investing in residential is the perfect long-term real estate investment, as it provides a relatively high income security and diversification relative to other sectors,” said Mathieu Elshout, investment director real estate at PGGM.
“This partnership allows us to build and own good-quality residential assets in the UK at scale, with a high degree of control over our investments.”
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