The prospects for large scale investment in residential property

Yolande Barnes
1st Oct 1996

The legislation creating Housing Investment Trusts (HITs) has raised the profile and status of private renting in the UK.

The potential rates of return for investing in this sector look attractive but some practical issues remain unresolved and restrictions and limitations on HITs may limit their success. A study by Yolande Barnes of Savills Residential Research Department found:

  • The creation of HITs will be inhibited by:
    - the need to have a value of at least £50m in order to be traded on the Stock Exchange;
    - the inability to buy BES companies or properties let on assured tenancies, coupled with the difficulty of building sufficient properties to order;
    - Government proposals to exclude properties worth more than £85,000 (£125,000 in London).
  • Whilst the HITs legislation is a welcome first step towards a mature residential property investment sector, the author recommends further work to improve/simplify taxation and other policies, perhaps in conjunction with similar measures in the commercial property sector.