Everyone with a long-term investment outlook has been targeting the sector, from pensions to sovereign wealth, insurance to endowments. Naturally investors with a long-term outlook require stable environments, whether that be economic or political stability. On the latter there are early signs of this with the new Labour government. There is a natural alignment with long-term patient capital and renters, both want good-quality, well managed and sustainable homes. For the first time in a generation, the quality of rental offering across the country is rapidly improving.

Although BTR completions are at record levels according to the British Property Federation, research by Savills has shown that there are still 30% fewer homes to rent across the UK compared to the 2018-2019 average. The UK must attract and retain international investment to ensure more high-quality homes for rent are built quickly.

Build to rent is critical for the Labour government to meet its 370,000 homes a year target, and a practical way to kick-start many sites across the country. In fact, without single family housing investment, many sites will simply remain in limbo. Single family housing has the ability to not only to deliver much needed rental homes, it is also an enabler for much needed affordable and key worker housing. For housebuilders, which by their nature are cyclical, they reduce risk and provide upfront capital. Housebuilding never comes without challenges – from high costs, to delays and financing issues – but at a time where delivering new single-family homes is a matter of urgency, the rise of institutional investors in the market plus the increasing focus on economic growth is very powerful politically.

It is, however, the rising interest and deployment of capital from domestic institutions, especially pension funds, that marks a key tipping point for Single Family Housing in the UK as an asset class.

In September, the UK’s state-backed pension fund Nest, which has assets of £43 billion from its 13 million savers, joined forces with insurer Legal & General and Dutch pension fund manager PGGM to invest up to £1 billion in BTR properties. It’s a clear example of demand from a well-known domestic pension fund to invest in delivering homes for rent.

UK Pensions Minister Emma Reynolds hailed the partnership for “harnessing the financial power of pensions to deliver more of the homes this government has pledged to build, which also serves as an excellent investment opportunity for future pensioners in their scheme”. Ms Reynolds' words are a refreshing sign that relying on and attracting institutional investment in UK SFH is more critical than ever, a theme echoed by minister for housing Matthew Pennycook, who wants to encourage more investment in homes for rent.

Policymakers have been seeking to channel more capital from UK pension funds into public infrastructure for many years, and the new government is strengthening the case for SFH to be part of this agenda with its planning reforms and vocal support. It is also providing political cover for itself – if well-known domestic pension funds are investing in single family rental, that is helpful domestic name recognition for the concept. If the government can continue to deliver its planning reforms and encourage more domestic pension funds to invest, international institutions will continue to follow, providing a multiplier effect.

As long as the government continues to keep channels open with the industry, SFH will have a big role to play in reviving housebuilding and helping the government to hit its own targets.

Jack Spearman, Managing Director, Single Family Housing