The firms will initially invest £600m into building purpose built private rental housing across the UK, providing over 3000 homes.
The partnership has been seeded with three Build to Rent development schemes; Bristol, Salford and Walthamstow, forecast to deliver over 650 homes.
PGGM has invested in Built to Rent housing for over 40 years. It currently owns close to £3 billion of residential investment exposure through its strategic partnerships in the Netherlands and the US. It is also in detailed discussions on the acquisition of numerous sites, all situated in urban locations where there is strong demand.
In America and Europe, fully fledged institutionally funded and managed rental property markets have developed to increase the supply of homes, lower prices and provide better quality products and service, according to Legal & General Capital. It wants 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.”
Mathieu Elshout, Investment Director Real Estate at PGGM, commented:
“Investing in residential is the perfect long term real estate investment, as it provides a relatively high income security and diversification relative to other sectors. This partnership allows us to build and own good quality residential assets in the UK at scale, with a high degree of control over our investments.
“As a responsible investor we believe that we have an obligation to contribute to a sustainable world. We can do so via impact investment, or investing in solutions, as we call it. This partnership not only addresses the supply/demand imbalance, it also aims to improve the UK’s built environment; acting as a catalyst for wider urban regeneration and creating rental stock in sustainable urban schemes centred around key transport hubs.”
