Lloyds Banking Group has announced plans to become a large private landlord, moving its first tenants in by the end of the year.
It aims to buy and rent out new and existing housing stock across the UK as it searches for sources of revenue, according to a report in the Financial Times.
Lloyds, the UK’s largest mortgage lender, hopes to take advantage of its low funding costs, strong brand name and knowledge of the housing market to become a major player in the sector.
As low rates squeeze the profit margins on traditional lending businesses, the move should bring direct benefits through rental yield and house price growth, as well as provide the ability to cross-sell rental deposit loans or insurance.
It’s not first financial institution to get into property; Legal & General is a huge housebuilder, leaser and landlord of private rented property, while retailer John Lewis recently announced plans to build a residential property portfolio to offset weakness in its high street stores.
Lloyds has also directly invested in several housing projects with smaller developers in recent years through a partnership with Homes England.
It believes the new plan could fit with its stated social objective of ‘helping Britain prosper’ by offering better quality and more professional services to renters than many existing landlords.
In its annual report, Lloyds also announced plans to expand the availability of affordable and quality homes by providing £10 billion of lending to first-time-buyers as well as to assess the energy retrofit requirements of more than 200,000 homes in the social housing sector.
The bank said: “We are committed to broadening access to home ownership and exploring opportunities to increase our support to the UK rental sector.”
Landlords with longer memories may remember that this is not Lloyds’ first foray into renting – during the 1980s it had one of the UK’s largest chains of estate agencies.
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