(Bloomberg) — Investors are pouring record amounts of cash into new U.K. rental homes, betting that demand will remain high as the pandemic batters the economy and puts ownership out of reach for more first-time buyers.
Investment in purpose-built rental apartments and houses will hit 4 billion pounds ($5.2 billion) this year, up from 2.8 billion pounds in 2019, according to a report from broker Knight Frank and residential property review site HomeViews. The market has so far proven resilient to the Covid-19 downturn, with rent collection averaging 95% in the period from March through August, according to the report.
Demand for rental housing in the U.K. has been growing for years, with one in five households renting privately, up from one in 10 in 2001, the report said, citing the English Housing Survey. The coronavirus has accelerated this trend, with soaring house prices, tighter lending conditions and economic uncertainty forcing more first-time buyers to postpone their ownership plans.
“I think the outcome of the Covid situation is that we will have more people renting for longer, simply as plans for home ownership get delayed further,” James Mannix, head of residential development and investment at Knight Frank, said by phone.
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