Grainger, a housebuilder listed in the FTSE 250, anticipates the completion of more than 1,600 new build-to-rent houses this year. This record-breaking expectation stems from Britain’s burgeoning demand for rental homes.
Helen Gordon, the Chief Executive Officer of Grainger, reported that the company had already completed five new housing schemes throughout England. Consequently, the company’s total property portfolio has grown to over 10,000 residences.
Factors Driving the Soaring Demand and Rental Costs
One of the main factors driving the increasing demand for rental homes in the UK is the surge in mortgage costs. This comes on the heels of the Bank of England implementing 14 successive interest rate hikes. These escalating costs have made rental homes an attractive option for many individuals who would have previously considered buying property.
Gordon added that the new homes are being introduced into one of the most robust occupational markets. She acknowledges that the cost of renting has spiralled beyond many people’s means due in part to a relatively weak stock and rising interest rates.
The situation has been further complicated by buy-to-let landlords exiting the sector due to changes in energy efficiency regulations. Tight planning laws have also resulted in delayed constructions of new developments.
According to the online real estate portal, Rightmove, as a consequence of the increased demand and diminishing supply, average advertised rents hit their highest ever levels, averaging £2,627 per month in London and £1,278 per month in other areas in the UK.
Grainger’s own rental prices mirrored this nationwide trend, growing 7.7 per cent on a like-for-like basis for the 12 months ending September 2023, up from 6.8 per cent at the halfway mark of the year.
Grainger’s Growth and Future Plans
In 2023, Grainger achieved £194 million in sales, with £70 million from vacant regulated sales. Founded in 1912, the company has a long-standing tradition of building American-style housing complexes. In these complexes, tenants enjoy not only comfortable living spaces but also a host of other amenities such as fitness studios, concierge services, gardens, and co-working spaces.
Grainger’s future looks promising with a pipeline of approximately 6,000 additional homes. These plans form part of their strategy to double earnings from operational activities over the next three years.
Consequently, Grainger shares rose 3.4 per cent to £2.35 by Thursday afternoon, landing them a position in the top ten risers on the FTSE 250 Index.
Wrapping Up
Despite the challenging market conditions, Grainger continues to strive towards ethical practices by upholding a strong commitment to customer affordability. The company’s growth in the face of a turbulent market presents a strong case for potential investment in rental properties amidst the current property landscape.