Article

Levelling Up and the UK Build to Rent Sector – an opportunity for the LGPS?

10 November 2022
Graham Hook
Graham Hook
Head of EMEA Government Relations and Public Policy
douglas-rowlands
Douglas Rowlands
Senior Director, Client Portfolio Management - Invesco Real Estate

Levelling Up involves spreading opportunity equally, ending geographical inequality and encouraging private sector investment. Can Build to Rent support this ambition and work for the Local Government Pension Scheme?

There is consensus that there is a significant shortfall of good quality, affordable housing in the UK. Whilst the Government has set a target to deliver 300,000 homes per annum, this is consistently not being met.

The recent Levelling Up White Paper, published in February 2022, looks to increase investment in housing across the UK – including from the private sector. In this note, we argue that Build to Rent (BtR) as an asset class is well-placed to align with this agenda. With a lack of supply and affordability concerns, the number of private renters is growing in the UK, with circa 98% of stock currently owned by small, non‑professional landlords.1

BtR supports the Government’s goal to improve not just the quantity but also the quality of accommodation, allowing for the creation of thriving communities across the UK.

As one of the largest, most mature “residential” sectors, BtR offers stable, monthly income from a well-diversified tenant base. BtR investments offer the ability to put capital to work efficiently and deliver long-term investment returns to pension funds through an environmentally and socially sustainable investment strategy.

What is Levelling up?

The term ‘Levelling Up’ wasn’t officially defined until the Government published its White Paper in February 2022. In it, Levelling Up is summarised as spreading opportunity equally, ending geographical inequality and encouraging private sector investment right across the UK so that everyone can share in the country’s success. The Government believes success in this mission could yield a significant economic prize, boosting aggregate UK GDP by tens of billions of pounds each year.

In this Levelling Up paper we consider:

  • What is levelling up and how does it support residential investment?
  • The opportunity in Build to Rent
  • Environmental, Social and Governance
  • Conclusions for Local Government Pensions Scheme funds (LGPS)
Download the paper

Footnotes

  • ¹ Knight Frank Research, January 2022.

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