26th
Aug 2021
The UK’s largest mortgage lender is now shifting its attention to becoming the biggest PRS landlord by acquiring 10,000 rental properties according to reports.
The group is determined to diversify as they are exploring other activities to maximise new alternative revenue streams.
It is purporting its intention to buy as many as 50,000 homes over the next ten years and will rent them out to tenants as a private landlord.
Lloyds is the UK’s biggest mortgage lender with around a quarter of home loans in its ‘portfolio’ however with interest rates at an all time low for over a decade, its returns have fallen dramatically.
The Financial Times has reported that Lloyds launched its Citra Living brand four weeks ago to move into new markets and increase external revenue streams.
The digital and broadsheet newspaper says that Lloyds’ internal job advertisement states it has a “strategic challenge” of acquiring 10,000 properties in less than five years and must be achieved by the end of 2025, however its challenge for a further five years is to add a further 40,00 PRS homes by the end of 2030.
Taking rental and property prices estimates into account, the lender’s plans could create a £4bn portfolio, with pre-tax profits amounting to £300 million.
If Citra achieves its targets it will top the nation’s biggest private landlord Grainger which currently has 9,100 BTL properties worth around £2.1bn.
The advert also suggests that the brand may enter into “M&A (mergers and acquisitions) opportunities and/or strategic alliances” to achieve its targets.
Over the past few years a few insurers and fund management groups have dipped their toes into the sector which include household names Legal & General and M&G.
Even retail giant
John Lewis some months ago announced its on plans to enter into the private rental sector.
A Lloyds' spokeswoman said: “As highlighted at launch, Citra Living will initially start small, with a focus on buying and renting good-quality, newly-built properties. This will be achieved by working alongside leading housebuilders to address the increasing demand for rental properties.
“The aim is to gradually provide incremental stock to the UK rental market over the coming years.”
Richard Merrick of PIMS, says:” I expect some other lenders will also follow suit, it is somewhat ironic that the bank’s landlord clients will help fund their own competition.”
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