Britain’s mainstream banks may be reluctant to lend these days, but a Kuwait-backed Islamic bank is to become one of Britain’s biggest residential landlords with a plan to build 6,600 rental homes and gain from the shortage in decent housing stock. It promises to be one of the biggest privately run home building projects ever.
Shariah-compliant Gatehouse Bank hopes to gain from the big shift in the country’s housing market away from buying to renting, as mortgages have become more scarce and unaffordable and prices have risen out of the grasp of many families.
Gatehouse, based in London, has formed a joint venture with the property developer Sigma Capital to leap into the sector. Initially they will build 2,000 new homes in Liverpool and Salford at a cost of about £200m before going on, if the venture proves a success, to build a further 4,600 properties with a further £500m investment.
If successful, it would overtake Britain’s biggest stock market-quoted landlord, Grainger Trust, which has currently got 4,000 homes, mostly in London and the South-east. Grainger recently reported a 24 per cent increase in the value of its estate.
Gatehouse vice president of real estate Scott Nichol said: “For us the supply-demand dynamic is absolutely rock-solid. We only see that growing as affordability constraints continue to strengthen.”
He said the private rented sector was very fragmented, with many “mom and pop” landlords. “Our entrance into the market is to try and bridge the gap between landowners, developers and housebuilders, and the institutional market.”
Shariah-compliant investments are not allowed to work on the basis of interest or monetary speculation. Surpluses have to be shared by all parties.
Gatehouse already has a £1bn property portfolio across the UK and US.