Deputy prime minister, Angela Rayer, was photographed just last month with Larry Finks, BlackRock’s chief executive - Hollie Adams/Shutterstock
Rachel Reeves bowed to corporate landlords in her Budget just as she mounted a fresh raid on ordinary families with incomes from second properties.
Private landlords now face tens of thousands of pounds in additional bills, from tax to licensing and energy improvements – while build-to-rent developers are on track for a £3bn windfall.
Many of these firms – which include FTSE 100 companies and even banks – have long lobbied successive governments in an effort to squeeze smaller, private landlords out.
Deputy prime minister, Angela Rayer, was photographed just last month whispering in the ear of Larry Finks, BlackRock’s chief executive.
Grainger UK, whose biggest shareholder is BlackRock, currently owns over 11,000 rental homes. It is believed to be the biggest corporate landlord in England.
Legal & General (L&G) also claims to have poured over £3bn into rental investments to date.
Even Britain’s biggest bank, Lloyds, is honing in on the opportunity. Its build-to-rent company Citra Living now owns 5,000 properties and counting.
“Behind closed doors, Labour tends to be supportive of build-to-rent – but not in public,” one industry insider told The Telegraph.
Some Labour politicians have already staked a claim in the corporate landlord market. London Mayor and “renters champion”, Sadiq Khan, has said he wants to raise £187m come 2030 by building rental homes near Transport for London (TfL) stations.
To achieve this, Mr Khan needs to more than quadruple the number of rental homes on TfL’s books, from 4,000 to 20,000, by 2031. As of this year, TfL had started building 4,000 rental units – of which only around 1,500 have been delivered to date.
Dan Wilson Craw, of campaign group Generation Rent, said profit-driven institutional landlords had been linked to “unaffordable rent increases”.
He said: “Some [tenants] have had better experiences than renting from individuals with a small portfolio, but being corporate doesn’t inherently equate professionalism and long-term tenancies.
“While some pension funds [investors of build-to-rent] appear committed to longer tenancies, with limited annual rent rises, we’ve heard reports of other investment funds seeking to maximise profits through unaffordable rent increases and evictions.”
‘Are we building the ghettos of the future?’
Build-to-rent flats are often advertised as being “more energy efficient” than private rental homes, but as some residents in Wembley have found out – that’s not always the case.
Speaking to The Telegraph earlier this year, tenants of Quintain Living – a US-owned company – said they were paying 86pc more for their energy bills than the average Londoner.
This was in spite of the company advertising average savings of “56pc” on utility bills, thanks to every flat boasting an energy performance certificate rating of “B”.
A Quintain spokesman has since blamed a planning consent order, which required the developer to build two district heat networks to supply heat and hot water to the buildings.
In another case in Croydon, south London, residents in one of L&G’s £3,000 a month “luxury” build-to-rent developments have spent the last year fighting for better living conditions.
Reports from My London and Inside Croydon in September quoted some of the 251 tenants whose pets had even fallen ill from mould, which was first exposed by campaigner Kwajo Tweneboa.
Others reported collapsed ceilings and severe water leaks. L&G has since begun to fix the issues which it blamed on a “build quality issue”.
Richard Upton, a social developer and a visiting fellow at the University of Reading, said he “worries” when he sees schemes of thousands of flats going up.
“Is that a place for people to live for 20 years? With just a coffee shop underneath? This is where we need to be thinking more about mixed use, adding parks and other amenities.
“Such is the rate of inflation and the cost of new things, that those in new-build flats – especially in London – can just about afford to exist. It’s a good thing if income-to-rent ratios one day come down, if we build enough. But at what cost? Are we building the ghettos of the future?
It’s not just the varying quality of new builds erected at pace that’s worrying. Often, rents for new-builds carry a 10pc premium – much like new-build sales.
Britain’s biggest landlord, Grainger UK, collects nearly £100m in rent each year.
In May, the London Renters Union campaign group protested outside Grainger UK’s head office accusing the company of “getting rich gentrifying our city’s neighbourhoods” and “lobbying [the] Government against our rights”.
In a thread on X, formerly Twitter, the campaign group also accused the company of putting up luxury flats for rent in historically working-class areas such as Tottenham or Canning Town which are “wildly unaffordable for local people”.
“Corporate landlords and developers are tearing our communities apart, pushing us out while lining their own pockets,” one of their tweets reads.
A member of the campaign group living in Seven Sisters claimed they were forced out by a 50pc rent increase, after their landlord cited a nearby Grainger UK development as “the new market rent”.
Grainger UK disputed this and said its Seven Sisters development, Apex Gardens, is regulated by the Government’s Regulator of Social Housing and includes a high proportion of affordable homes on rents below the open market.
Grainger UK told The Telegraph that rather than lobbying against renters’ rights, it has publicly supported Labour’s Renters’ Rights Bill.
In September this year, in an official London stock market announcement, Grainger Uk said it “looks forward to continuing to use its expertise to help inform and shape the final legislation”.
A spokesman for Grainger UK said that tenants of the company in London spend just “28pc” of their incomes on rent and that it has “no control over other landlords’ pricing”.
Their shareholders benefit from around 41 cents of every euro tenants pay in rent on average, according to the research arm of consumer lobby group Finanzwende.
Unprecedented rises in rents, paired with poor maintenance, has sparked city-wide protests and referendums to transfer ownership of the homes back to the state after it sold them off in the 1990s.
The city’s largest renter association told The Telegraph last year that while individual landlords typically raise rents by around 20pc, corporate ones will raise them by as much as 50pc.
One thing which is worrying England’s corporate landlords – despite all the well-received lobbying – is Labour’s plan to get rid of powers to write rent increases into contracts, as part of its Renters’ Rights Bill.
This change, once in legislation, will force corporations to serve tenants with rent notices which – unlike contracted rent increases – can be challenged in a tribunal if they do not reflect the “market rate”.
If tenants were to start challenging rent increases en masse, this could pose a serious risk to the income of these listed companies and their shareholders.
Some law firms have even suggested such “restrictions” on in-tenancy rent increases could lead to deep-pocketed landlords waging costly future legal challenges against the Labour government – particularly if rents fail to keep pace with market inflation.
