There is a shortage of homes to rent for families. The real estate investment trust, PRS REIT has launched an investment strategy to increase the supply of rented homes for families.
The buy-to-let housing market has expanded, but the majority of properties are flats occupied by young professionals, leading to an undersupply of family homes.
It is estimated that property in the private rented sector is worth £2 trillion. About 2.2 million households are renting and this is predicted to rise by over 1.1 million over the next five years. There is a shortage of houses to fulfil the expected demand, and this is particularly the case for family houses.
Property investor PRS REIT is working with house builders Countryside and Keepmoat to finance the buying of land and building family houses for rent. According to the website of Sigma Capital (which calls itself “the architect of The PRS REIT plc”), this initiative has a target of building 2,500 properties. This investment also makes financial sense, with a 5% rental yield predicted that is expected to grow to 6% after three years. It is also forecast that capital growth will be healthy on these investments.
PRS REIT’s confidence in the family rented sector demonstrates that landlords wishing to diversify their portfolio should consider purchasing buy-to-let family homes to fulfil the strong demand by families. Though regulation changes to stamp duty and the decreases on tax relief paid on commercial mortgages have made it more difficult for landlords, it is still possible to achieve good returns on buy-to-let investments.