Trump’s planned limits on US property investing could spur foray into UK housing market | Housing market

Major US investors and private equity firms could step up their foray into new home construction in the UK after Donald Trump’s decision to ban institutional firms from buying single-family homes in the US, sparking concerns that investors could “cut corners and raise rents”.

The US president said last week he would ask Congress to codify the measure to address concerns that families are struggling to buy or rent a home. The median sale price of a property was $410,800 (£305,000) last year, according to the US Census Bureau.

Analysts predict the ban could prompt major US investors, including Madame Tussauds owner Blackstone, to step up their efforts in the UK property market.

While professional investors insist they want to provide good quality, well-managed housing, expectations that they will seek to increase profits on rents could put them at odds with tenants.

“Large investors and investment funds have no place in the UK property market,” said Ruth Gilbert, spokeswoman for Living Rent, the Scottish tenants’ union.

She added: “A reliance on investment companies and private funders for good quality public housing will only exacerbate this housing crisis, as they cut corners and raise rents, forcing people out of their homes to satisfy shareholder dividends. »

Gilbert called on Westminster and the devolved UK governments to work together on a “mass social housing programme”.

Jae Vail, spokesperson for the London Renters Union, said: “As millions of us struggle to pay our rent or live in unsafe temporary accommodation, foreign investors seek short-term profits with expensive construction projects that cost local people dearly.

“We need long-term investments in social housing and rent controls to reduce housing costs for everyone. »

Since the rise in foreclosures after the 2008 financial crisis, large institutional investors such as Blackstone and other private equity firms have acquired tens of thousands of homes in the United States for rental. They have become large landlords, often competing with home buyers, and have been accused by politicians and tenants’ unions of raising the cost of renting and buying homes. Analysts say that to make housing more affordable, more housing must be built.

In the UK, investors tend to purchase multiple homes in new developments rather than existing homes. Marcus Dixon, UK head of housing and residential research at property group Jones Lang LaSalle, said institutional investors buying existing homes are more likely to buy entire rental portfolios, rather than buying homes from owner-occupiers.

“Policies of successive governments have discouraged small buy-to-let landlords in favor of large institutional investors, meaning a similar ban in the UK seems unlikely,” he said.

“Conversely, the US ban could boost activity in the UK. With a number of US investors already active in the UK market, they could divert their funds here instead.”

Investors and private equity firms already in the UK market include Blackstone, California’s Kennedy Wilson, New York’s KKR and Chicago’s Nuveen, which manages $1.4 trillion in funds.

Blackstone, a New York-based asset manager with more than $1 trillion under management, has purchased a wide range of properties around the world, from hotels and offices to student housing, warehouses and rental housing. Its real estate arm manages assets worth $320 billion (£240 billion).

Blackstone said: “As is widely documented, building more homes is the only sustainable way to improve housing availability and affordability. In the UK, Blackstone’s investment has supported the creation of more than 20,000 new affordable homes since 2017, making our portfolio company, Sage Homes, the largest provider of newly built affordable homes in the UK.”

KKR, Kennedy Wilson and Nuveen declined to comment.

Blackstone’s best-known assets in the UK include Madame Tussauds, the London Dungeon, Legoland Windsor and Sea Life Aquariums.

In housing, two Blackstone-backed providers, Leaf Living and Sage Homes, have teamed up with UK builder Vistry Group in an £819 million deal in late 2023 to acquire around 2,900 new homes. Blackstone discussed the sale of Leaf with bankers, according to Bloomberg.

Although Sage, which offers affordable rental and shared ownership housing, lists glowing testimonials on its website, not all tenants are satisfied.

A year ago, Sage said she was “extremely sorry” for the service’s failures, after the housing ombudsman found the landlord had failed to adequately address the concerns of 18 residents, including a disabled resident with mental health problems. Sage said it has made significant changes, including bringing all housing management services in-house.

In Spain, Blackstone had become the largest private landlord in 2019, but last year began shedding its residential assets in Barcelona, ​​citing legal uncertainty and stricter rental regulations. It has not acquired additional housing in Europe since 2021.

Entering the UK in 2024, Kennedy Wilson and Canada’s CPP Investments have teamed up and their company has invested £213 million across multiple deals that will deliver 900 rental homes, from three housebuilders across seven development sites.

Institutional investors own 0.5% of all single-family homes in the United States and purchases have declined 90% since 2022, Blackstone said.

In the UK, just 0.2% of privately rented homes are operated by investors, a figure which rises to 0.4% when including housing developments under construction, according to property company Knight Frank.

Knight Frank said in a report last April that the UK single-family housing market had “become an attractive proposition for institutional investors”.