Leading American investors and private equity firms could significantly increase their activity in the United Kingdom's new-build housing sector, following former US President Donald Trump's pledge to ban institutional buyers from purchasing single-family homes across the Atlantic. This potential shift is raising alarms that large-scale investors may prioritise shareholder returns over tenant welfare, exacerbating Britain's existing housing crisis.
US Policy Shift Could Reshape UK Investment Landscape
Trump announced last week that he would seek to codify a measure preventing large institutional companies from buying family homes in the US, aiming to address widespread affordability concerns. With the median American property sale price recorded at $410,800 (£305,000) last year, the policy is designed to help struggling families. However, analysts predict the ban may prompt major US investors—including firms like Blackstone, the owner of Madame Tussauds—to double down on the British property market instead.
While corporate investors publicly commit to providing quality, well-managed housing, the expectation that they will seek increased profits from rents places them in direct conflict with tenant interests. Ruth Gilbert, a spokesperson for Scotland's tenants union, Living Rent, stated unequivocally: "Major investors and private equity have no place in the UK housing market."
She warned that reliance on such firms "will only exacerbate this housing crisis, as they cut corners and increase rents, forcing people out of their homes to satisfy shareholders’ dividends." Gilbert called for a coordinated "mass programme of public housing" across Westminster and the devolved governments.
Tenant Unions Demand Fundamental Reform
Echoing these concerns, Jae Vail of the London Renters Union highlighted the stark contrast between daily struggles and investor activity. "While millions of us struggle to pay our rent or live in unsafe temporary accommodation, overseas investors chase short-term profits with expensive build-to-rent developments that price out local people," Vail said. The union advocates for long-term investment in council homes and the implementation of rent controls.
The trend of institutional investment in housing took root after the 2008 financial crisis, when firms like Blackstone acquired tens of thousands of foreclosed US homes to rent out. These entities have grown into large-scale landlords, often competing with individual buyers and facing blame for inflating both rental and purchase costs. Analysts consistently argue that increasing housing supply is the fundamental solution to affordability.
UK Market Presents a Different Model for Investors
The UK investment landscape differs from the traditional US model. Here, institutional players typically purchase multiple units within new developments rather than snapping up existing stock from owner-occupiers. Marcus Dixon, UK head of living and residential research at Jones Lang LaSalle, explained that when investors do buy existing homes, it is usually entire rental portfolios.
"The policies of successive governments have disincentivised small buy-to-let landlords in favour of larger institutional investors, meaning a similar ban in the UK appears unlikely," Dixon noted. He added a crucial insight: "Conversely, the ban in the US could drive activity in the UK. With a number of US investors already active in the UK market, they could divert funds here instead."
Prominent US firms already operating in Britain include Blackstone, Kennedy Wilson, KKR, and Nuveen—the latter managing a staggering $1.4 trillion in funds. Blackstone's real estate arm alone manages assets worth $320bn (£240bn). The firm has stated its commitment to solving the housing shortage, claiming its investment has "supported the creation of more than 20,000 new affordable homes since 2017" through its portfolio company, Sage Homes.
However, the track record is mixed. A year ago, Sage Homes apologised for service failings after a housing ombudsman investigation, though it says it has since reformed its operations. In Spain, Blackstone became the largest private landlord but began offloading assets in Barcelona last year, citing legal uncertainty.
Despite the growing presence, the scale remains limited. Institutional investors own just 0.5% of all single-family homes in the US, with purchases plummeting by 90% since 2022. In the UK, only 0.2% of privately rented homes are operated by institutional investors, rising to 0.4% when including developments under construction, according to Knight Frank. Nevertheless, the property consultancy identified the UK's single-family housing market as a "compelling proposition" for these deep-pocketed investors, a allure that may intensify if Trump's proposed ban takes effect.
