![A Berkeley crane at work on a roof](https://media.guim.co.uk/b0c7568439c5be3acd61c313dd2c3c6cea1eb822/445_405_3542_2126/1000.jpg)
The housebuilder Berkeley is to go back into the private rental market for the first time in a decade by launching a build-to-rent arm to tackle the “severe shortage” of properties in and around London.
The company, which built 3,500 private-sale homes last year, will establish the build-to-rent business, which aims to create 4,000 homes in London and the south-east over the next decade.
Berkeley plans to develop the properties across 17 brownfield sites and launch a dedicated online platform to manage them.
On Wednesday, Berkeley reported a pre-tax profit of £557m for the year to 30 April 2024, down from £604m last year. However, it has increased its pre-tax profit guidance for 2025 by 5% to £525m.
The company was founded in 1976 by the late Tony Pidgley and has established itself as one of the country’s largest housebuilders, focusing on developments in London, the south of England and Birmingham.
The launch of a build-to-rent arm marks a return to the rental market for Berkeley, which built and managed a portfolio of 900 rental homes between 2011 and 2014. It said the move was a natural extension of its strategy and recognised the “severe shortage of high-quality rental accommodation”.
A shortage of rental homes in the capital has caused average rents to soar. The property website Zoopla recorded average rents in London at £2,122 a month, up 3.7% on last year. The real estate firm JLL forecasts rents could rise by nearly 19% in Greater London by 2028.
Berkeley said it would finance the new portfolio through internal sources, debt secured against the rental properties and third-party capital funding.
Rob Perrins, the chief executive, said: “Recognising the strong occupational and institutional investment demand for high-quality, well-managed rental homes in London and the south-east, Berkeley is establishing its own build-to-rent platform to maximise returns in today’s market conditions.”
Commenting on the results, Perrins said: “This is a strong performance in a challenging and volatile operating environment, demonstrating the resilience of Berkeley’s business model with its focus on the country’s most undersupplied markets.”
The trading update listed a series of requests for the next government to improve conditions for housebuilders. These included greater resources for stretched local authority planning teams and refinancing housing associations so they could concentrate on providing more homes.
It said the new government needed to refrain from making significant changes to the market and instead resolve the small operational challenges in the planning and regulatory system to make it faster and more predictable.
In their manifesto, the Conservatives pledged to build a record number of homes on brownfield land in urban areas by providing a fast-track route through the planning system for developments, while also pledging to build 1.6m homes during the next parliament.
Labour has promised to deliver 1.5m homes over the next parliament and immediately reinstate mandatory housing targets for local authorities, which were scrapped in 2022 by the government.
Berkeley’s shares fell by nearly 4% on Wednesday, valuing the company at £5bn.