New data shows positive impact of rental homes from institutional investors

Hearthstone Investments' new data reveals the positive impact of rental homes delivered by institutional investors.

Data from Heathstone's new report highlights the positive impact that institutional investment is having on the affordable rental housing market | BTR News
Data from Heathstone's new report highlights the positive impact that institutional investment is having on the affordable rental housing market.

New data from residential fund manager Hearthstone Investments highlights the positive impact of rental homes that are backed by institutional investors such as Local Government Pension Schemes (LGPS) – which are delivering impact through regional investment and the provision of much needed affordable private rented housing.

The new data – from the company’s 2023 Impact and Sustainability Report – is based on Hearthstone Investments’ portfolio of 1,800 rental homes – a mix of houses and flats in low-rise apartment blocks.

The initial acquisition of new homes delivered regional investment and employment across England, Scotland and Wales spread over 50 different locations. 45% of these sites were transformative regeneration projects of brownfield sites. After the initial investment, the ongoing management of rental homes creates permanent local employment for agents and contractors.

“We recognise the importance that investors put on the ESG criteria of the homes we are investing in and it’s a value we share. There is a desire to better understand what impact these investments have on the economy and communities where they are focused. Our latest report helps us to paint a picture for investors of what is being delivered and for whom, demonstrating value above and beyond capital returns. The site selection strategy deliberately focuses on areas not only where the supply/demand imbalance will secure long-term, stable returns for investors, but also where there is good quality social infrastructure – services, green space, access to public transport – all factors which contribute positively to residents’ wellbeing. There is also a great opportunity to drive employment both in the short and longer term with local people involved in the construction and ongoing maintenance of the homes.”

Cedric Bucher, CEO, Hearthstone Investments

Hearthstone found that the rental homes provide accommodation for residents on average UK incomes. Residents have a broad range of occupations: nurses, police officers, warehouse operatives, software engineers, and chefs, to name a few. In 2023, 27% of residents were key workers.

The report also shows that 55% of residents had moved ten miles or less when they moved into a rental home in the portfolio, evidence of how the new homes are meeting specific local needs. An assessment of local infrastructure around the properties covered in the report shows that 83% of homes are located within 500m of public transport and 81% of homes within 250m of public green space. 

“Homes backed by institutional investors such as LGPS through our funds are helping to meet a specific housing need – the provision of good quality, energy-efficient rental homes, affordable for residents on average incomes, where they are needed the most. The data in this report shows the potential of this model for the future. Institutional investors can deliver positive impact through affordable private rental housing in a way that individual private landlords just can’t and in doing so, see the positive ripple effect into the local economy, environment and communities.”

Cedric Bucher, CEO, Hearthstone Investments

Hearthstone aim to deliver affordable private rental homes to people on average incomes in areas of great need. The benefits of this commitment can be seen in regeneration, employment, community and placemaking. Across the portfolios, spend on maintenance, lettings, and property management and the services that support this – over £5m per annum for the firm – creates employment for contractors, agents, valuers and suppliers, drawing on local skills and knowledge.