A pension scheme run by Islington Council in London is set to invest several million pounds -possibly as much as £20million- in domestic rental properties. The investment will be made through a specialist buy-to-let fund manager. The property website landlordzone claims this is the first time a major pension scheme has used this route to access the let property sector. This will be an interesting decision for landlord insurance clients. Does it vindicate your decision to put your faith and your money in the buy to let market? Alternatively, if major pension funds start coming in to the market will this put upward pressure on prices? Maybe it will lead to an increase in the supply of properties available to rent which will be a good thing for potential tenants, especially in some of the overheated areas of the country.
The council’s fund is aiming to buy property in both the UK and Europe and intends to own some homes in its own area. These ones will be made available to first time renters.
Like all investors, pension funds have been struggling with disappointing returns from share portfolios so it is perhaps not surprising that they are looking at alternative ways of securing income with the hope of capital growth in the long term. As usual it all depends on your view of future trends in rents and house prices.