News that Berliners may vote on effectively renationalising 200,000 rented apartments may have some institutional investors exploring build-to-rent in London looking nervously at the capital.
With Labour mayor Sadiq Khan backing rent caps and Momentum now controlling a number of London councils, such heavy-handed state intervention in the rental market is not beyond the realms of possibility. However, BTR investors needn’t worry too much.
One saving grace is London lacks the same powers and mechanisms as Berlin to hold such a referendum.
Then there are the causes behind the push for the renationalising housing in Berlin.
First, much of the housing stock in question there was at one point publicly owned. This simply isn’t the case in London, where most BTR blocks are privately funded and owned from the get go.
Second, the main trigger for the vote seems to be poor maintenance. The company at the centre of the row – Deutsche Wohnen AG – is accused of spending less than half on maintaining its buildings than what state-run housing companies do.
Rent levels have obviously come into play too, with affordability being a key issue in the German capital, as it is in virtually every major city.
Looking closer to home, recent innovations in the UK rental market may help some mitigate some of the negativity around pricing.
Companies like Grainger plc and PLATFORM_ are broadening the BTR offer to include more mid-market product. Meanwhile the likes of L&G and Blackstone are exploring privately provided affordable housing, although smaller firms like Caridon Group have been doing it for years.
If anyone is to be concerned by the potential vote in Berlin it is the housing associations who typically own large chunks of ex-council stock.
Squeezed by the Conservatives who still favour homeownership and a Labour that wants more state-run housing, HAs are in a tough place. Recent scandals such as at A2 Dominion’s Clyde House only add to the pressure. Between an expanded Tory right-to-buy and creeping Corbynite nationalisation, HAs risk ever-shrinking portfolios.
This is a shame, as HAs do a lot more than simply build cheap housing, often providing crucial services for the most vulnerable as well. With the policy right support, bigger associations such as L&Q and Thames Valley Metropolitan could be delivering far more homes than they currently are.
That’s not say it’s all gloom and doom for the sector. HAs like Swan are pioneering modular construction while a wave of mergers and consolidations has created some organisations with genuine heft. But unless they get better at fighting their corner, HAs face a tough few years politically.