Tuesday, October 26, 2010
Institutional investors wanted
Outside the social housing sector, the UK has long been dependent on the small private landlord (the buy-to-let landlord) to provide housing. However, I wonder if this is good enough. Some small landlords are excellent, some are awful. Most suffer from lack of scale (they don't have full-time handymen at their beck and call) and from cash flow problems: when the purchase of a new boiler requires several months' worth of rent to be set aside and there is a mortgage to be paid, not very many tenants get new boilers. But regardless of whether buy-to-let is a good or bad thing, it still isn't able to provide for a market shifting en masse to needing good long-term rental property. For that, we need the institutional sector.