Moorfield Group believes it is time for institutions to professionalise the Private Rented Sector in England, following the example of the US market, where institutional investment in existing, granular properties has increased from close to $0 to $40 billion in the last ten years.
That is the reason the UK real estate fund manager has teamed up with Bricklane, the proptech residential investment platform, to establish a partnership targeting a £600 million portfolio of professionally-managed homes for rent.
The partnership is aiming for a rental portfolio of 2,000 homes and plans to buy existing houses and flats over the next two years through Bricklane’s Compass platform. Properties, that range from one- to four-bedroom homes around London, Bristol and the South East, will be refurbished to grow rental income and capital values.
By focusing on existing properties, in particular the 98% of the rental market owned by the UK’s 2.5 million buy-to-let landlords, the partnership expects to deliver attractive risk-adjusted returns and provide superior service and quality of homes to a wider range of tenants, while also avoiding the carbon-cost of demolition and construction.
It is the first time that institutional capital has tried to unlock the PRS potential of the UK’s existing residential stock at scale and it represents the most significant technology-driven investment in the UK’s residential market to date.
“The time is ripe for institutional capital to access and professionalise the mainstream PRS,” said Simon Heawood, CEO and co-founder, Bricklane. “Demand is at an all-time high, while it is becoming less financially attractive for individual landlords to operate in the sector and tenants are demanding higher quality service and more secure contracts for their homes.”
Access to the mainstream market requires industrialising the acquisition and management of large numbers of individual assets. This is impossible without deep investment in technology, Heawood said: “We have spent years building the technology platform, data science expertise and management experience to enable us to capitalise on this opportunity. The scale that this partnership brings will be transformational for our business, meaning that we are the leading platform of our kind in Europe.”
Using Bricklane’s technology, the partnership said it will target attractive sub-markets with deep granularity, using unique bottom-up data to acquire rental properties that are expected to outperform in those areas at an unprecedented scale.
“This partnership will help further diversify our activities in our ‘beds’ theme and see us drive the professionalisation of a vast but fragmented market,” said Ross Netherway, head of origination, Moorfield Group. “It provides us with an efficient and scalable means to find, buy, and manage individual residential properties for rent in our target markets.”
Moorfield has been an early investor in the living sector and a pioneer in PBSA, retirement living and build to rent. It recently announced a partnership with We are Kin to focus on the one million-bed House in Multiple Occupation (HMO) student accommodation market, with a number of portfolio and individual acquisitions already completed.
Bricklane specialises in acquiring and managing granular residential for rent across the UK, with existing portfolios in London, Leeds, Manchester, and Birmingham.