Lloyds diversifying away from traditional sources of income
Lloyds is seeking to become on of the largest landlords in the UK as the major bank will buy 50,000 homes in the next ten years, it has been reported.
In an effort to diversify away from traditional lending as a source of income, which is not as fruitful at the moment due to low interest rates, Lloyds has entered the private home rental market.
The Financial Times reported that Citra Living brand, under which Lloyds operates, has set a “strategic challenge” of acquiring 10,000 properties before the end of 2025. By 2030 the FTSE 100 bank will aim to reach 50,000 properties.
Estimates suggest that Citra’s balance sheet would be valued in the region of £4bn, generating around £300m in profit before tax.
William Chalmers, Lloyds’ chief financial officer, told analysts a month ago that “we are keeping this on a limited basis while we explore the area, while we allow ourselves to learn from it”.
Recent changes to the tax system have led to there being fewer smaller-level landlords who previously made up the rental sector in the UK. Instead, larger companies have moved in due benefit from a shortage in housing and a rise in the number of families renting.
Lloyds said: “As highlighted at launch, Citra Living will initially start small, with a focus on buying and renting good quality newly built properties. This will be achieved by working alongside leading housebuilders to address the increasing demand for rental properties, and the aim is to gradually provide incremental stock to the UK rental market over the coming years.”