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Aviva Investors setting up UK residential property fund

The British insurer is in the process of setting up a fund to acquire homes for rent. In May, the Homes and Communities Agency called for pension funds and other financial institutions to invest large-scale in the residential sector.

The property management arm of UK insurer, Aviva, is in the process of setting up a residential property fund.

Aviva Investors has teamed up with property services firm Richard Ellis and an unnamed US residential property manager to invest a reported £1 billion (€1.1 billion; $1.6 billion) into the UK residential sector. The idea is to acquire homes to rent out.

The move follows a call in May by the recently formed Homes and Communities Agency for pension funds and other financial institutions to invest large-scale in the residential sector.

To do so, the agency has created the Private Rented Sector Initiative (PRSI), noting there is strong investor appetite for low risk investment focused on income distribution and a “longer-term investment horizon”. It said: “Many believe that this is the perfect time to expand the private rented sector.”  

According to Reuters, Aviva says there is no planned launch date for the fund as it is still at the early stages, and declined to confirm a report in the Financial Times yesterday that the vehicle could raise up to £1 billion.

According to the Financial Times, the vehicle would pre-order purpose-built residential blocks in the southeast of England to rent out, mainly around large transport hubs and significant regeneration sites.