Lloyds Banking Group is planning to become a large private landlord as it seeks new sources of revenue with interest rates at record lows, the Financial Times reported.
Under the plan, called “Project Generation”, Britain’s biggest retail bank will buy and rent out new and existing properties across the UK, the FT said, citing documents and people familiar with the initiative. Lloyds aims to have its first tenants by the end of this year.
Lloyds, which owns the UK’s biggest mortgage lender Halifax, wants to use its low funding costs, brand recognition and knowledge of the housing market to become a big operator in the fragmented private landlord market. The bank, which also owns Bank of Scotland, has commercial relationships with almost all the UK’s biggest housebuilders.
The move shows the pressure retail banks are under as rock-bottom rates shrink lending margins with rates set to stay low for the foreseeable future. Lloyds hopes to sell loans and insurance to tenants as well as taking rental yield and potential value gains from the properties it buys, the FT said.
Lloyds told the FT: “We are committed to broadening access to home ownership and exploring opportunities to increase our support to the UK rental sector.”
The BTU union for Lloyds employees warned against the idea, saying: “The private rental market is such a risky business and if things go wrong the bank’s reputation could take a hammering.”