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MIPIM 2011: Improve scale and tax structures to ease national housing crisis, industry chiefs to announce

A debate at the MIPIM property convention in Cannes⁽¹⁾ will hear how greater scale and the introduction of a tax efficient structure akin to REITs could be instrumental in remedying Britain’s looming housing crisis, by attracting institutional and private equity investors.

The event, run by the British Property Federation (BPF), Grainger⁽²⁾ and Addleshaw Goddard⁽³⁾ will hear how demand for homes has never been greater and the long-term returns in residential investment far outweigh those in commercial.

The so called ‘build-to-let’ model with purpose built rental accommodation, owned by institutions and professionally managed, could build the homes the UK needs and deliver an attractive return for investors.

Liz Peace chief executive of the British Property Federation will announce the time has come for institutional investment in the UK residential market: “The traditional build to purchase and buy-to-let house building model is simply not delivering enough homes to meet the UK’s future needs.

“At the same time long-term returns in residential investment far outweigh those in commercial. Most of the ingredients for institutional investment in residential property are already in place.”

Yet the sector still struggles to attract institutional and private equity investors, who stand ready to invest up to £1 billion each in building homes for rent. The most often cited explanation is the charging of stamp duty when buying multiple properties as it is currently charged per purchase and not on the collective amount. Charging on the collective amount would greatly reduce costs for large investors buying a portfolio of properties which they could then professionally manage.

Nick Jopling, Executive Director at Grainger, comments: “The private rented sector now makes up over 15% of the housing stock in England. Over the last few years while the rest of the housing market has been on its knees, the private rented sector has stepped in and demonstrated that it could deliver attractive returns for investors. However institutional investors have largely been conspicuous by their absence in the market.

“Tackling the perceived barriers of scale, management intensity and acquiring well located assets is possible as Grainger has demonstrated. Effective asset management can add value and lift returns beyond house price inflation. With the right platform, skills and expertise, residential investment can be very attractive. It’s important for the industry to continue to spread the word and encourage institutional investors to buy into residential.”

Justine Delroy, Partner at Addleshaw Goddard, feels a tax efficient structure for large scale residential investment might be the key to unlocking institutional investment: “We are lagging behind other jurisdictions in our approach to this problem. Whilst the market accommodates some collective investment in residential property, particularly in central London, on a smaller scale by entrepreneurial, often offshore, funds, what we really need is a benign tax environment for UK institutional investment.”

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For further information or to organise an interview please contact:

Patrick Clift, Media and Public Affairs Manager, British Property Federation, on 07834 439 505, or pclift@bpf.org.uk

Paul Sweeney, Media Assistant, British Property Federation, psweeney@bpf.org.uk  – 020 7802 0113 / 07841 732 194

Notes to editors:

(1)    Wednesday 9 March 2011, 10.30am, Villa Antoine, 3 rue Jean Baptiste Dumas, Cannes
(2)    Grainger Plc is the UK's largest listed specialist residential landlord
(3)    Addleshaw Goddard LLP is a UK-based law firm (established as an LLP) with almost 750 lawyers, based in Leeds, London and Manchester. It was formed on 1 May 2003 by the merger of Addleshaw Booth & Co with Theodore Goddard

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