Berkeley Re-enters Rental Market to Address London Housing Crisis

London, UK - June 19, 2024: Berkeley, one of the UK’s leading housebuilders, is set to re-enter the private rental market after a decade with the launch of a new build-to-rent arm. This strategic move aims to address the “severe shortage” of rental properties in London and its surrounding areas.

The company, which constructed 3,500 private-sale homes last year, plans to develop 4,000 homes in London and the south-east over the next ten years. These properties will be developed across 17 brownfield sites, with Berkeley also launching a dedicated online platform for management.

Despite reporting a pre-tax profit of £557m for the year ending 30 April 2024, down from £604m the previous year, Berkeley has increased its pre-tax profit guidance for 2025 by 5% to £525m. Founded in 1976 by Tony Pidgley, Berkeley has grown to become one of the country’s largest housebuilders with a focus on London, southern England, and Birmingham.

The build-to-rent arm signifies Berkeley’s return to the rental market since it managed a portfolio of 900 rental homes from 2011 to 2014. The company acknowledges the acute shortage of high-quality rental accommodation and sees this as a natural extension of its strategy.

With rental home scarcity driving average rents in London to £2,122 a month, up 3.7% from last year according to Zoopla, and JLL forecasting a near 19% rise in Greater London rents by 2028, Berkeley’s initiative is timely. The new portfolio will be financed through internal sources, debt secured against the rental properties, and third-party capital funding.

Rob Perrins, Chief Executive of Berkeley, commented on the strong demand for quality rentals and Berkeley’s commitment to maximising returns in current market conditions. He also highlighted the resilience of Berkeley’s business model amidst challenging times.

Berkeley’s trading update calls for government action to improve conditions for housebuilders, including better-resourced local authority planning teams and refinanced housing associations focused on increasing home provision.

Berkeley’s re-entry into the rental market with its build-to-rent platform is a strategic response to London’s escalating housing crisis. By leveraging its expertise in high-quality home construction and management, Berkeley is poised to make a significant impact on the availability of rental homes in London and the south-east.