Fund manager Moorfield and proptech innovator Bricklane say they will unlock the private rental potential for institutional capital in the UK’s existing housing stock.

The £600M venture, using Bricklane’s technology, is a full-frontal challenge to the 98% of the rental market owned by the UK’s 2.5 million buy-to-let landlords and is being tagged by the partnership as the most significant technology-driven investment yet in the UK’s residential market.

The companies say the plan could be the first step in the UK following the example of the U.S. single-family residential market, in which institutional investment in existing granular properties has scaled from nothing to $40B in 10 years.

The idea is to create a portfolio of 2,000 professionally managed homes for rent from existing housing stock. The investments will be acquired over the next two years and managed by Bricklane through its proprietary technology platform, Compass.

The initial focus will be on London, Bristol and the South East. The joint venture will target neighbourhoods that are expected to outperform in those areas. Once units are acquired, the partnership will seek to grow income and capital values through active asset management and refurbishment.

Moorfield and Bricklane said they expect to deliver attractive risk-adjusted returns and provide superior service and quality of home to a wider range of tenants while avoiding the carbon cost of demolition and construction.

Bricklane specialises in acquiring and managing granular residential for rent across the UK, with existing portfolios in London, Leeds, Manchester and Birmingham.

“The time is ripe for institutional capital to access and professionalise the mainstream Private Rented Sector,” Bricklane chief executive and co-founder Simon Heawood said in a statement.

“Demand is at an all-time high, while it is becoming less financially attractive for individual landlords to operate in the sector. Moreover, tenants are rightly demanding higher quality service and more secure contracts for their homes.”