UK pension funds set to move back into property

Friday 1st May 2009

In a move which could give the UK property sector a solid foundation for future growth it has been revealed that pension funds and investment companies in the UK are currently in talks with the government about acquiring large scale housing developments. The idea is to create an institutional private rented sector which will see pension funds and investment companies buying up whole housing estates to reduce the stress on the UK housing sector.

It appears the government is willing to offer certain guarantees in exchange for supporting the sector which could include guaranteed rent and reduced stamp duty payments for bulk housing purchases. Even though the UK property sector is still under pressure at this moment in time, the long-term potential for appreciation from the current level is very significant. As pension funds and many investment companies tend to look longer term there is a growing belief that there is value in the UK property sector and this together with the government guarantees under discussion make the situation more attractive than ever.

How ironic that the UK government is now looking to work hand-in-hand with the financial institutions it has been criticising over the last 6 to 12 months!

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