Residential Letting and Management
Overview
With over £1bn invested in UK single family housing in 2023 despite what many are considering challenging market conditions the credentials of Residential Investment as an investment class seem to be there for everyone to consider. Indeed the number of opportunities presented to us by our own clients as well as potential new entrants through our Agency colleagues seems to be showing no signs of slowing.
Who is Active?
Allsop’s management of The Thistle Portfolio latterly named as Project Domus provides a clear indicator there is still significant institutional appetite for single family assets with Goldman Sachs selling the portfolio to PGIM in the first quarter of 2023.
Allsop manage and operate a number of significant single family housing schemes owned by PGIM, Packaged Living, Columbia Threadneedle and Savills Investment Management all of which are providing further demonstrable credentials for an asset class we believe will rapidly overtake BtR Multi-Family. Schemes launched this year include Telford, Rugby, Alconbury and Braintree.
Headline Deals
Over the course of the next 12 months Allsop will launch a minimum of six further single-family schemes across the UK in addition to BtR assets in Leeds and Liverpool. The market conditions for institutional landlords are strong – an already chronic undersupply of stock coupled with various BTL landlords exiting the market due to rising interest rates compounded by a less favourable tax environment is reducing supply in the marketplace. Statistics gained on our SFH schemes shows up to 20% of our customers are coming directly from BTL landlords exiting the market exacerbating even further the supply/demand imbalance.
Additionally, as these brand new, professionally managed homes, high quality homes hit the market the customer-base is ready to hoover them up mirroring those experiences of multi-family. Allsop are now managing waiting lists on all our single-family assets as we wait for future phases to handover. This demand is universal across all 20+ housing estates showing this is a national not regional issue.
Whilst Allsop are outperforming underwrite targets we continue to closely monitor affordability rates as the cost-of-living crisis and the associated inflationary pressures hit household incomes. To date the impact on affordability ratios has been less pronounced (22% of household income is spent on rent) in single family housing where traditionally households do spend a smaller proportion of their household income compared to BtR.
Our Multi-Family assets are also thriving and certainly no stranger to success. These multi-award-winning assets continue to enjoy low voids, strong rental growth and importantly less churn, driven by excellent customer service but also a reticence to move home in what is an economically uncertain period for many people.
Our Eda (295 apartments) scheme in Anchorage went live during September quickly hitting 25% lease up inside a month in what is arguably most competitive market for BtR in the UK.
Direction of Travel
What is clear is that there is currently an environment where more pressure is on housebuilders to do deals and possibly be more amenable to an amendment of specification. How long that environment will take to equalise again is uncertain but in the meantime it is clear there are is a great deal of institutional money happy to make SFH part of their business plan.