In the build-to-rent (BTR) market, the growth of single-family housing (SFH) is proving attractive to both regional and international investors. Investment manager Long Harbour recently moved into the sector and last month received a £300m boost from South Korea's National Pension Service (NPS) to support its £1.6bn SFH fund.

Managing director Jack Spearman discusses the firm's SFH expansion plans amid strong promise for the sector.

How will you use the funding from NPS?

We've got a very extensive network of relationships with housebuilders. We are essentially doing a number of transactions with not only large housebuilders but (SME) housebuilders, whereby we will fund the development for future stock via sets of forward-funding agreements.

So predominantly, it will all be committed this year and then delivered over the next two or three years. We'll enter into an agreement with the housebuilders on a particular site and they'll go and build 50 to 100 home over the next few years.

Do you have any future plans with NPS?

I cannot speak for NPS, but they've made a commitment to us of £300m. You can look at what they've been up to the last few months and you realise they are big allocators. Their aspiration is to see us grow the venture, grow the platform- I'm sure they want to be a part of that, but I can't speak for them. They are a long-term investor ultimately, so we expect to do more with them.

Do you have wider SFH investments plan?

We are seeking between £800m and £1.2bn of capital commitment. With some moderate leverage, it will enable us to reach a £2bn capital figure to deploy, which will get us 5,000 new single-family rental properties over the next five years. That's our target.

We've got a suitable window to go and do that. It is quite well known that some of the bigger investors tend to be the global Institutional investors, global pension funds. We would expect and hope to see some of those large label investors, as we have managed to do before, come along for that.

Do you lean more towards volume or SME housebuilders?

Obviously, there are efficiencies in scaling with a housebuilder that can give you lots of scale. That is attractive in one sense, but is is also quite one-dimensional. We like the idea of using SME housebuilders, where we spread our risk a little bit and spread our locations.

We don't necessarily want to have to just one relationship with one housebuilder; we want to have a number of partnerships. At the moment, we're probably looking at a 50:50 split, so we're certainly not putting all our eggs in one basket.

What's your view on the current SFH market?

Everyone still considers it early days in the UK. That is probably largely down to the fact there are so few operational assets. There are probably nearly 20,000 operational units in the UK, which is really small if you look at the wider market. There are probably another 20,000 in the pipeline as well over the next two or three years coming through.

Will we see a boom in SFH?

There has been a lot of talk about SFH overtaking within the multi-family sector and becoming the new BTR leader in terms of volume. If you look at the statistics, that does make sense; but that should bear out given 75% at all rental homes are actually in suburban locations. You can draw parallels from across the Atlantic in North America, where single-family has grown into a huge part of the sector.

Through 2025, we'll probably see some new capital entrants to the market, and same more secondary transactions. We'll also see some who have been in the market for the last five to 10 years looking to try to exit on behalf of their investors - that is often a sign the market is maturing. You can see people are getting more certain of operational costs, for example.

I think we have already seen this in the multi-family space, like the benefit of transparency on data, and people are getting more confident. The sector as a whole needs to be a bit more transparent about data, because it is beneficial for everyone to understand how it is growing.

For the first time, a lot of people are going to strat seeing competitors on the same site; whereas, if you were in the industry four years ago, you were not in that situation. That is very good for private renters to start seeing competition on the same site. It is going to push quality and it is going to push best customer service.