Grainger's rents grow as streamlining steams ahead

Grainger's transition to a streamlined private sector landlord progressed well in the four months to 31 January, it reported, with growth in both its rentals and sales divisions.

The FTSE 250 company - the UK's largest listed residential landlord - said demand had continued for its wholly owned-and-managed private rented sector homes, with positive growth in regulated tenancy rents.

Rental increases in 2015 averaged 7.8% on new lets (excluding refurbishments), and 3.6% on renewals, up from 6.3% and 2.6% respectively.

Including refurbishments, the company said new lets increased by 10% on average.

Increases for regulated tenancy assets, where biennial rent reviews had been completed in the period, averaged 6.3%, which was down on 2015's 9.6%.

The company said its sales division saw £39m of revenue from sales of vacant properties - up from £26m last year - which was an average of 4.2% above the September 2015 year-end vacant possession values.

Grainger said its sales pipeline at the end of the period was £83m, compared with £81m a year ago.

"On 28 January we set out our updated strategy to capitalise on the substantial private rented sector market oppotunity and be the UK's leading private landlord," the company's board said in a statement.

"Our immediate priority will be to transition to one highly-focused business that will deliver improved and sustainable rental asset-led shareholder returns," it added.

Grainger's strategy through to 2020 included investing more than £850m into private rented sector assets to drive income growth, and increase net rents and other income to more than cover overheads, expenses and finance costs.

The company aimed to deliver net rental income exceeding profit from sales, and increase its dividend to reflect the greater proportion of rental income.

As part of its streamlining and re-focusing, Grainger had announced the sale of its equity release division and its exit from Germany. It was also reviewing development projects with a view to exit non-core schemes, as well as looking at reducing overheads and its cost of debt.