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Over the last few years we have undertaken a shift in strategy towards an increasing proportion of our homes being delivered for institutionally owned build to rent housing. Our vision is to be one of London’s leading build to rent developers and the partner of choice.
We are already working in partnership with well-respected, experienced and ambitious institutional investors and we intend to place even greater focus on build to rent over the coming years.
We view build to rent as being the future of increasing housing delivery in London. The proportion of Londoners renting is rising and will continue to do so with customers increasingly turning to a rental model, not just due to affordability, but more as a lifestyle choice looking for greater flexibility.
The London rental market is undersupplied and renters are known to experience issues with poor quality housing and a lack of landlord interaction and property management. Purpose-built rental housing assists in addressing these issues by improving the supply of good quality rental homes and delivering better customer amenities, improved on-site services and more secure and flexible tenancies.
Renting is an attractive alternative to owning a home due to the significant reduction in financial commitment needed both in terms of transaction costs and financing costs. As a result, the rental market in the UK, particularly in London, is starting to mirror that in many US cities where build to rent has been introduced over the last 25 years and made renting a way of life.
We are well placed to develop purpose-built rental housing with a proven track record of delivering high-quality homes in London over the last 18 years. We are currently working with institutional partners across multiple build to rent developments.
In March 2019, we announced that we have formed long-term strategic partnerships with M&G and Invesco for forward fund transactions. We believe that the partnerships will lead to more efficient ways of buying land and designing bespoke build to rent schemes that match with each investor’s requirements. Through the standardisation of legal documentation, we also anticipate that the contractual process for each transaction will be shortened.
We will continue to work with other investors and current partners such as Greystar, on both existing and new projects, particularly where they bring opportunities to us or on sites that do not fit the criteria of either M&G or Invesco.
We are delighted to formally cement what has been an excellent working relationship with Telford over the last three years. Commercialising the production of homes to rent at scale with a likeminded, high quality developer of rental stock, is another step closer to fulfilling M&G’s residential investment strategy. Telford Homes has been an early adopter of the sector and this is another example of how it adjusts its model today to focus on tomorrow’s customers and occupiers.
Alex Greaves, Head Of Residential Investment At M&G Real Estate
Build to rent is enabling us to reduce our exposure to market risk in return for reduced margins. This trade off fits well with our traditional desire to minimise the risks the business is taking. The forward funded nature of build to rent transactions improves our return on capital and reduces our need for debt finance, which in turn means we can more swiftly increase our output of much needed homes in London.
We expect our new partnerships to provide a significant catalyst to our objective to become one of London’s leading build to rent developers and that our increasing involvement in the sector will be a key driver of the growth of Telford Homes in the years ahead.
The missing ingredient between strong tenant demand and increased capital for build to rent product is the ability to source development opportunities, obtain planning consents and build the homes themselves; our expertise in these areas makes Telford Homes an attractive partner for investors.
Jon Di-Stefano, Chief Executive Officer, Telford Homes Plc
Telford Homes has a proven track record of delivering high quality homes. We provide our partners with significant in-house expertise, which allows us to de-risk and control the whole development process. Our services include sourcing well-located land opportunities, securing planning consents and ensuring the delivery of consistently high quality and well-designed homes and places.
We are delighted that Telford Homes has chosen Invesco as a strategic investment partner for their projects in excess of 200 build to rent units across London. The alignment of our respective strategic objectives to both develop the UK build to rent sector and to seek to redress the supply/demand imbalance that exists today, makes for an exciting collaboration and we look forward to working closely with the Telford Homes team to deliver market leading projects. Our global institutional investors continue to believe in the fundamentals of the UK build to rent market and we still see an increasing appetite for the sector both in London and the wider UK market as it provides a key investment opportunity for a diversified investment portfolio.
John German, Managing Director Of Residential Investments At Invesco Real Estate
Contact our Build to Rent Development Director, Caroline Radford today.
Call: +44 (0)1992 809 800