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Canadian Pension Fund Sinks £600 Million into UK Investment Properties

Investment Properties

Changes to the tax breaks until now enjoyed by buy-to-let landlords who own investment properties may have some questioning how attractive the asset class will continue to be. However, the professionals certainly appear to have unshaken faith in the future of UK buy-to-let. Canadian pension fund unit Oxford Properties has announced taking a £600 million stake in Get Living, a built-to-let specialist residential property fund.

Other investors in Get Living, which has a 4400-unit development pipeline for rental properties in London, Leeds and Glasgow, include the property arm of Qatar’s sovereign wealth fund and Dutch pension fund APG. Get Living already owns a portfolio of 2000 built residential units, mainly in London. Oxford Properties’ £600 million stake means that in partnership with UK property developer Delancey, the unit of the Ontario Municipal Employees Retirement System will own 39% of Get Living.

The new investment is earmarked to take Get Living’s pipeline of new rental investment properties to 12,500 over coming years – a massive bet on the sector. The plan is for developments across the UK in numerous cities, each comprised of at least 400 residential units.

Build-to-let development tailors properties specifically to the rental market. That generally means compact units such as studios, 1 and smaller 2 bedroom apartments. Such developments also often include amenities such as a gym, cafe or bar. Because the building has one owner, the rooftop area can also be utilised for facilities.

While build-to-let developments are generally funded by institutional investors and of course involve economies of scale that private buy-to-let landlords don’t have, they will still be encouraged by the faith being shown in the sector. The nature of the investment is changing with mortgage interest no longer tax deductible. Nonetheless, for investors able to put down a significant deposit on a buy-to-let property, or own enough units to make moving them into a company structure worthwhile, there are still clear opportunities.

It is expected that in future years more UK residents than ever before will rent rather than own their primary residence as well as doing so until later in life. Many may well, as is already common in Germany, decide that home ownership is not the be all and end all and prefer to rent, directing funds into a pension or other priorities.

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Paul

The author Paul