- Housebuilders are responding to market slump
- Limited information about bulk deals
The past two years have shown just how cyclical the housebuilding business is. Higher interest rates have slashed private buyers' budgets, so many of the UK's biggest players have been bulk-selling homes to large buyers at discounts and eating the margin hit. Registered social housing providers (RPs), local councils and large institutional private rented sector (PRS) landlords buy these homes, sometimes before construction has completed or even started, and, in most cases, they then lease them out.
The model is an understandable response to a market downturn and can benefit investors, their buyers and the people ultimately living in the homes. However, many of these bulk deals are opaque, despite currently accounting for around a quarter of the largest listed housebuilders' sales on average (see table). There is even less disclosure on RP deals, even though the limited information available suggests they can account for a significant proportion of these deals, and there is evidence of large housebuilder sales to at least one RP that is non-compliant with regulator standards.