Legal & General Capital (LGC) has teamed up with Dutch pension fund manager PGGM to develop private rental property in UK cities.
Their Build to Rent partnership will initially invest £600m into building 3,000 homes for private rental housing.
LGC said that it “plans to disrupt the status quo of ever increasing rental rises by investing long-term institutional funds into building new homes to rent at scale, and by developing a UK institutional rental market”.
Paul Stanworth, managing director of Legal & General Capital, said: "The UK rental market, compared to the US and Europe, is dysfunctional, with ever increasing rents and increasingly poor accommodation. 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. At Legal & General we’re going to play our part by disrupting the market, and invest significant sums of long-term institutional money to build new rental housing, and develop a UK institutional rental market."
The partnership has been seeded with three developments, in Bristol, Salford and Walthamstow, forecast to deliver more than 650 homes. It is also in discussions to acquire more sites, all in urban locations where demand is high.
LGC’s Dutch partner PGGM has invested in Built to Rent housing for over more than years and owns close to £3bn of residential investment exposure through partnerships in the Netherlands and the USA.