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Highlights:
- Slower Rental Growth: Grainger reported 6.3% LFL rental growth in 2024, down from 8.1% earlier in the year.
- Strong Pipeline: The company expects to double rental income in 2025, driven by new developments and strong wage growth.
- Optimism Amidst Policy Support: Grainger welcomed the Labour government’s opposition to rent controls, which supports the company’s long-term strategy.
Grainger Plc (LSE:GRI), a major player in the UK’s private rental sector, has reported a deceleration in rental growth for the year ending September 30, 2024. The FTSE 250-listed company, which owns approximately 12,000 homes, noted that while rental growth has slowed, the outlook for the coming year remains positive, with expectations for growth to remain above the long-term historic average.
Slower Rental Growth in 2024
Grainger reported a 6.3% like-for-like (LFL) rental growth in the year ending September 2024. This figure marks a decline from the 8.1% growth recorded during the first half of the year and the 7.3% growth seen in 2023. The company attributed this slowdown to broader market trends, but remains optimistic about the future.
Chief Executive Helen Gordon noted that although rental growth is expected to slow further in the upcoming year, it will still surpass the long-term historical averages. Gordon also highlighted that Grainger's robust development pipeline and recent acquisitions, including more than 1,100 new homes, will double the company's rental income compared to the previous year.
Strong Pipeline and Optimism for 2025
Despite the recent slowdown, Grainger is looking ahead with confidence. For the financial year ending September 2025, the company expects rental growth to be underpinned by strong wage growth across the UK. Gordon emphasized that rental market demand is accelerating due to constrained housing supply, creating favorable conditions for continued growth.
Grainger's transition to becoming a real estate investment trust (REIT) in the coming year is expected to provide additional benefits. The company is working closely with the government on new housing legislation, including the Renters’ Rights Bill and planning reforms. Gordon welcomed the Labour government’s opposition to rent controls, which she believes will help stimulate housing supply and benefit the rental market.
Shares and Market Reaction
Grainger’s shares remained flat at 245p in mid-morning trading on Monday, reflecting a 7% decline over the year to date. Despite this, the company’s long-term outlook remains positive, driven by a strong portfolio and favorable market conditions.
