The Berkeley Group’s announcement it is entering the private rental sector is not good news for private tenants.

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The property developer and home builder plans to let out 4,000 new homes across 17 of its brownfield regeneration sites in London and the South East as the first step in its 10-year strategy. It claims this is to help reduce the scarcity of available homes to rent relative to demand in the capital which its states is the country’s most under supplied area of PRS housing stock which of course cause ridiculous levels of high rents.

Berkeley told its shareholders: “Having sold over 1,000 homes across five sites in the last three years to institutional investors on a forward commitment basis, we now believe that adopting a more strategic route to this market will drive best value for these assets by creating a portfolio of scale, professionally managed, with proven income levels stabilised prior to disposal.”.

However Rohit Kohli, director of a mortgage broker, describes this as “bad news for renters and homebuyers alike” and continues: “Big business increasingly entering the private rental sector is going to drive up rents and, with reduced housing stock for sale, send property prices soaring, pricing out even more buyers from the market. It’s a win-win for Berkeley, as this is an unregulated market where they can control the rents and prices. But it’s a dream-shattering blow to many aspiring first-time buyers who desperately want a place of their own."

Justin Moy, managing director of a mortgage broker, agrees and says: "Larger corporate landlords in the residential market will potentially be bad news for tenants, giving them huge control of rental pricing whilst maintaining a vested interest in keeping property prices high by controlling new build development. As a business model this is becoming popular, with Lloyds Bank already building a similar sizeable portfolio. Sadly, reducing property stock for first-time buyers will only drive prices higher for this ever-suffering demographic."

Dariusz Karpowicz, director at a financial advisors firm also shares the same viewpoint that the Berkley announcement is not necessarily a positive for private renters and commented : "Along with Asda and TSB, who also announced their plans to become landlords, this sends a clear message that investing in UK rental property is still seen as lucrative. While it's becoming harder for smaller landlords due to increasing rules and regulations, bigger companies see this as an opportunity to establish a profitable investment. We’ll likely see more announcements like this, but it's not necessarily a positive development for the market.

“The entry of corporate landlords like Berkeley Group into the rental market could have significant ramifications. For tenants, it might mean more professionally managed properties, but possibly at higher rents. Reduced supply of homes for sale could drive house prices up further, making it even tougher for first-time buyers to enter the market. Institutional money flooding into the rental sector could squeeze out smaller landlords and limit buying options, leading to a more competitive and expensive housing landscape."

Ben Perks, managing director of a financial advisory service, says: "Berkeley Group are making a bold move to monopolise the rental market, and the next government needs to keep an eye on this growing trend. These large corporates are the ones that should be penalised with tax restrictions, not those people who have one buy-to-let with pension provision in mind. If builders are keeping property for self-gain, it will reduce what’s available to first-time buyers. Whilst it will help with government house building targets, the household crisis will rumble on."

Richard Merrick of PIMS,said: “ The PRS is in danger of becoming a monopolised sector as large corporates enter and ‘takeover’ rental housing stock.