Build to Let could threaten the profits of private landlords in major cities as institutional investors step into fund and rent out new homes.
Student landlords are already under attack from a similar move as universities and financial institutions like pension funds and merchant banks join forces to build new halls of residence.
The financial model calls for the universities to manage the halls and to sell housing as part of the course package to students, cutting out letting agents and private landlords, according to a new report.
Demand still outpaces supply for good quality accommodation outside London, but Build to Let may be about to change the rules.
In the UK, according to a report from property consultant Knight Frank, only 1% of property is owned and managed by financial institutions.
However, In the USA, the figure’s nearer 13%, 17% in Germany, 23% in Switzerland and 37% in the Netherlands.
Knight Frank forecasts that encouragement and funding from the government is likely to see more interest from institutional investors to look at developing and letting homes as well as student housing.
“Build to Let is becoming more established in London, but other cities like Bristol, Manchester, Leeds, Birmingham and Liverpool are ripe candidates as well,” said a spokesman.
Like student housing, private apartments in blocks are expected to come with extras like communal areas, gyms, laundries and underground parking as part of a letting package that private landlords will fail to compete with.
“Large multinational funds are interested in the private rented sector because of the scope to increase in years to come from 16% of all households now to as much as a quarter in 2025 according to some forecasts,” said the spokesman.