Grainger, the listed residential landlord, saw its pre-tax profits rise by 7 per cent in the first half to £54.3m as it increased rents and completed new housing developments.
The group said “strong structural drivers” in the private rented sector, which now houses 4.5m UK households, “continue to underpin good rental growth”. It said there was a “growing trend of private landlords exiting the sector”.
Like-for-like rental growth was 3.7 per cent from a year earlier, slightly slower than last year’s 4.1 per cent growth. Net rental income rose by a third to £29.1m on completion of new developments.
However, group revenue dropped by a fifth to £107m as it sold off fewer properties than last year. Grainger also owns homes with regulated tenancies, which can be sold off when the tenants die, but is in the process of transforming itself into a private landlord focused on mid-market homes.
The UK’s private rented sector has traditionally been dominated by small, individual landlords but the sector has become less appealing after a series of tax changes. Corporate property owners such as Grainger have been seeking to fill the gap.
Over the last year Grainger has acquired Grip, a former joint venture with a Dutch pension fund that comprises about 1,700 homes, for £396m, and also agreed a deal with Transport for London to develop 3,000 new homes on its land.
Helen Gordon, chief executive, said the Grip acquisition “along with our pipeline of PRS [private rented sector] development projects will see our net rental income more than double over the coming years, delivering strong future dividend growth”.
The group increased its interim dividend by 10 per cent to 1.73p a share.