As Housebuilders Struggle, Deal Possibilities Open Up For SFR Investors

Residential Development Is An Attractive Sector In Which To Back Businesses, Price Said.

As interest rate hikes hit the pace of sales by housebuilders, an opportunity is opening up for single-family rental investors to buy portfolios of already-completed homes.

Listed housebuilder Crest Nicholson this week issued a profit warning, saying that its full-year profit would be around £50M, lower than the £74M it had previously forecast. Sales per outlet per week was 0.25 homes in the seven weeks to 18 August, compared to a forecast of 0.5 homes, the company said.

As a result, Crest Nicholson is “currently negotiating several bulk deals,” the company said in a trading update that did not name the companies it is selling units to in the deals.

“These transactions will provide support to volume delivery in future years,” it added.

The news comes amid an increase in the pace of sales by housebuilders to real estate investors for SFR strategies in recent months.

Carlyle entered the UK single-family rental market in June, buying 288 homes from listed housebuilder MJ Gleeson for £50M in a joint venture with SFR specialist Gatehouse Investment Management. The homes are spread across multiple developments, with 66 already completed. The JV will pay for the homes as they are completed.

Also in June, hedge fund Man GPM agreed to a deal with Taylor Wimpey for an undisclosed amount to forward fund the development of 96 single-family homes for rent at its Stanhope Gardens project in Aldershot, Hampshire. The homes will be offered at discounted market-rent levels.

“The UK has long been one of the least affordable housing markets in the world, and this has been exacerbated by the cost-of-living crisis — we know growing numbers of people are living in unsuitable accommodation,” Man GPM Managing Director and Head of Community Housing Shamez Alibhai said in a release.

“The Stanhope Gardens development is a good example of how we can put institutional capital to work on meaningful projects that deliver positive social outcomes.”

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