Grainger, the UK’s largest listed landlord, has boosted its dividend by 10 per cent following a surge in rental earnings. The FTSE 250 group predicts rents will proceed to rise as small personal landlords stop the market.
The Newcastle-headquartered firm, which rents 10,000 properties throughout the UK, on Thursday reported like-for-like annual rental progress of 6.8 per cent within the six months to March, up from 3.5 per cent a 12 months earlier than.
Grainger expects rents will proceed to speed up, supported by wage inflation, as the availability of properties for a rising variety of tenants is pinched by an exodus of small personal landlords.
“They’re really leaving the market. That’s what is exacerbating the supply-and-demand imbalance,” stated chief government Helen Gordon. “The rationale they’re leaving is elevated regulation, elevated taxation and, in all probability for them, rising rates of interest that they’ll’t deduct from their earnings.”
The tight market contributed to a 12 per cent enhance in internet rental earnings at Grainger to £48mn within the six months to March, permitting the corporate to spice up its dividend 10 per cent to 2.28p per share from 2.08p.
The corporate plans so as to add 6,000 properties by way of a £1.6bn growth programme as massive traders ramp up building of so-called “constructed to lease” property, which has emerged as a rising sector in an in any other case largely gloomy business property market.
Grainger’s portfolio is 98.5 per cent occupied, the corporate stated, with newly let properties going for rents 8.2 per cent greater than final 12 months.
Gordon stated large skilled landlords already performed a bigger function in different international locations reminiscent of Germany and Canada, and that the UK was within the “foothills of a transition” from small to massive landlords. “Within the UK, it’s nonetheless a mama and papa business,” she stated.
Rents on privately let properties elevated 4.9 per cent throughout the UK within the 12 months to March, in response to the ONS; the quickest enhance for the reason that company started monitoring in 2016. The provision of rental properties has remained largely flat since 2016, in response to housing web site Zoopla, whereas the variety of renters has grown.
The UK authorities has been underneath growing strain to deal with the housing scarcity. Levelling up secretary Michael Gove is shortly anticipated to deliver ahead a rental reform invoice that may finish “no fault” evictions.
Gordon stated she supported measures to present renters extra long-term safety of their properties, however that the federal government wanted to supply an environment friendly method to evict “dangerous egg” tenants who “disturb their neighbours” as a result of present routes by way of the courts are too gradual.
