Newcastle landlord Grainger Plc to focus on the build-to-rent market

Newcastle landlord Grainger Plc is set to build to rent, to capitalise on the growing number of families renting

george@georgebrooks.net Andrew Cunningham, chief executive of Grainger Plc
Andrew Cunningham, chief executive of Grainger plc

Rising numbers of private rentals is driving Grainger Plc to focus on the build-to-rent market, the firm has said.

Founded in 1912, the Newcastle-headquartered business is the UK’s largest private landlord with around 60% of its portfolio in lucrative London and the South East.

But the firm said it has seen recent moderating of house price inflation in the south, in contrast to seeing “signs of positive movement” in house prices in a number of its regional markets.

As it issued a market note to shareholders, announcing a strong performance across all parts of the business during the 10 months to July 31, the company said it is focussing on the private rental market, a sector which is rapidly growing as those seeking to get onto the housing ladder are priced out.

In the interim management statement the firm said: “The latest English Housing Survey showed a further increase in the number of households privately renting, now the second largest housing tenure in the UK, underpinning our strategic focus on that part of the housing market, particularly via build to rent.”

During the 10-month period the firm, which employs around 150 people in the North East, saw a 20% lift in estimated profit from sales, from £59.1m to £71.1m.

Sales of £236.5m were recorded, compared to £258.7m during the same period last year, while gross rents generated approximately £47.3m, down from £61.4m last year.

However, this was in line with expectations, after the company made a number of asset sales.

Fees and other income totalled £10.5m, compared to £9.9m in 2012/13.

During the period the business completed, exchanged or placed in solicitors’ hands some £173.6m of property acquisitions, including the significant £160m buyout of the Chelsea Houses Portfolio, set in one of the wealthiest postcodes in the UK.

The company said it expects its assets to continue outperforming the wider market, despite various measures which have threatened to temper the market.

In the interim management statement the firm said: “Following our strong performance thus far in our financial year, recent measures taken by the Bank of England in the mortgage market and the Mortgage Market Review, have slightly dampened sentiment in the housing market.

“However, we have not yet seen a significant, sustained impact on the market beyond normal seasonal variations.”

Grainger chief executive Andrew Cunningham added: “We have delivered a strong performance across all parts of the business over the period and we anticipate that our assets will continue to outperform the wider housing market.

“We continue to focus on generating shareholder value through investment, selective disposals, asset management and development opportunities, and the steady strengthening of the UK economy continues to underpin the progress of our business.”

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