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Berkeley returns to build-to-rent market amid London housing shortage | Berkeley

Housebuilder Berkeley is re-entering the private rental market for the first time in a decade, launching a rental housing division to address a “serious shortage of properties” in and around London.

The company built 3,500 private homes last year and is launching a build-to-rent business, aiming to build 4,000 homes in London and the South East over the next decade.

Berkeley is set to develop properties across 17 brownfield sites and launch a dedicated online platform to manage them.

Berkeley said on Wednesday it would make pre-tax profits of £557 million for the full year to 30 April 2024, down from £604 million last year. But it raised its pre-tax profit guidance for 2025 to £525 million, a 5 percent increase.

The company was founded in 1976 by the late Tony Pidgley and has established itself as one of the UK’s largest housebuilders, focusing on developments in London, the South of England and Birmingham.

The launch of the rental home construction division marks Berkeley’s return to the rental market after building and managing 900 rental homes between 2011 and 2014.

The company said the move was a natural extension of its strategy and recognised a “serious shortage of quality rental housing”.

A shortage of rental housing in the capital has caused average rents to soar. According to property website Zoopla, the average rent in London is GBP 2,122 per monthThat’s up 3.7% from last year, and real estate firm JLL predicts rents are likely to rise. In Greater London, the increase was around 19%. By 2028.

Berkeley said it will fund the new portfolio through internal funds, lease-backed debt and third-party capital funding.

Chief executive Rob Perrins said: “Recognising the strong demand from professional and institutional investors for high quality, well-managed rented homes in London and the South East, Berkeley is building a unique build-to-rent platform to maximise returns in today’s market conditions.”

Commenting on the results, Perrins said: “This is a strong performance in a challenging and volatile operating environment and demonstrates the resilience of Berkeley’s business model, which is focused on the country’s most undersupplied markets.”

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The trading update includes a list of demands for the next government to improve conditions for housebuilders, including providing more money to overstretched local authority planning teams and refinancing housing associations so they can focus on home delivery.

The new government said it would refrain from making major changes to the market, instead focusing on resolving minor operational challenges in the planning and regulatory system to make the market faster and more predictable.

Berkeley’s shares fell nearly 4% at the open on Wednesday, valuing the company at £5 billion.