Lloyds Banking Group is close to buying its first rental properties in a bid to go head-to-head with private landlords.
The UK’s largest mortgage lender has reportedly agreed to acquire a block of flats in Nene Wharf, Peterborough, and could start renting them out as soon as next month.
Lloyds is expected to manage the 50 residential units through a subsidiary called Citra Living.
It first announced plans to enter the sector in March, targeting new and existing housing stock across the UK as it searches for sources of revenue.
The plan – Project Generation – is set to bring in another source of income for Lloyds after it saw profits tumble by 72% to £1.2 billion last year as it battled the economic fallout of the pandemic.
Lloyds aims to take advantage of its low funding costs, strong brand name and knowledge of the housing market to become a major player in the sector, and believes it can offer better quality and more professional services to renters than many existing landlords.
The move could pave the way for Lloyds to sell other products to prospective tenants, such as insurance or loans for deposits.
The lender has also directly invested in several housing projects with smaller developers in recent years through a partnership with Homes England.
Lloyds says: “As we stated in our full-year results in February, we are committed to broadening access to home ownership and exploring opportunities to increase our support to the UK rental sector.”
It’s not the first financial institution to get into property; Legal & General is a huge housebuilder, leaser and landlord of private rented property, while John Lewis announced plans earlier this year to build a residential property portfolio to offset weakness in its high street stores.