Push into BTR landlord market comes as housebuilder warns sales will “remain subdued” in the short-term
Berkeley Group has announced it will establish its own build-to-rent (BTR) platform to build and manage 4,000 homes over the next decade, as it expects sales to remain “subdued” in the short-term.
The housebuilder announced the plan to operate and manage a large portfolio of rental properties today in its results for the year to 30 April.
It said its push into the BTR market is a “natural extension” of its past activity, which has seen it forward sell 1,000 homes to institutional investors across five sites over the past three years.
It said: “We now believe that adopting a more strategic route to this market will drive best value for these assets by creating a portfolio of scale, professionally managed, with proven income levels stabilised prior to disposal.”
The 4,000 homes will be delivered across 17 brownfield regeneration sites, Berkeley says. The establishment of the portfolio will be financed by internally generated funds, debt secured against the rental properties once income generation and third-party capital.
It said: “We will be locking in build costs early in the investment cycle and with yields linked to long-term interest rates, there is strong potential to drive value accretion over the next ten years, as well as incremental income while the properties in the portfolio remain owned by Berkeley.”
The BTR move was revealed as Berkeley announced a 7.7% drop in pre-tax profit for the year to 30 April, from £604.m to £557.3m. Turnover also dipped 3.4% from £2.55bn to £2.46bn.
It said the pre-tax profit was however in line with its previous forecasts. It increased its guidance for pre-tax profit in 2025 by 5% to £525m. It is targeting £975m over the next two years.
>>See also: Could build-to-rent become the ‘darling of housing delivery’?
Berkeley said the sales market “remains subdued” with the value of underlying private reservations around a third lower than the previous year, which it said reflects the “ongoing macroeconomic and geopolitical uncertainty and, in particular, the prolonged period of elevated interest rates”. It said it is positioned for “positioned for sales rates to remain subdued for the near-term.”
The housebuilder sold 3,521 properties in the year, down from 4,043 the year before.
It said: “We anticipate sales reservations will remain around current levels until we see the first reduction in interest rates and customers have confidence in the trajectory for rates and the wider economy.”
1 Readers' comment