US-style rental sector 'implausible'

Savills has rejected calls from the British Property Federation to introduce a US-style professional rental sector, deeming the proposals unviable.

Letting agents in America tend to be run on a much larger scale than in the UK, with senior property managers letting personal dwellings in a similar vein to commercial property agencies.

By eschewing local landlords and smaller regional letting agencies, US companies are able to exploit economies of scale that increase affordability among tenants and boost overall confidence in the market.

However, leading global real estate service provider Savills has dismissed the notion that such an approach would work in the UK - attributing its success in the US solely to the abundance of property and space in that vast country.

"There may be higher quality and more professional management than with the smaller investors," Jacqui Daly, a director with Savills, acknowledged. "[But] the fundamental barrier is the lack of stock. For institutions to invest there has got to be the companies in the market for them to invest in - and there are very few."

The government has set a target of building some three million new homes by 2020.

News posted on 27th February, 2008