Only buy a house if you can stay ten years, says landlord boss

Boss of one of Britain’s largest private landlords pushes the case for renting

IT’S a view that might grate with ‘Generation Rent’ who can’t get on the housing ladder. But Helen Gordon, the chief executive of Grainger, one of Britain’s largest private residential landlords, is trying to convince me that some younger people are renting out of choice, not necessity.

‘I think there’s a younger generation coming through that don’t have the same views on ownership,’ says Gordon, 59. ‘They rent their cars, they rent their phones, they rent their music. They don’t have that same concept of ownership as perhaps an older generation did.

‘Part of it is lifestyle, part of it is cost. I meet lots of people who say, “I can rent a better quality property than I could buy.”’

Grainger, a FTSE250 company worth £1.4billion founded more than a century ago in Newcastle, is among a new group of landlords offering American-style complexes where residents pay rent and get other services thrown in.

That could be anything from concierges, cinema rooms and gardens to broadband, gyms and any repairs that need doing. The number of socalled ‘build-to-rent’ blocks under construction by firms such as Grainger has jumped 40 per cent in a year amid rising demand for these new homes. It’s not just a London phenomenon, either. In November, Grainger completed the largest build-to-rent complex in Manchester, where rents start from £730 a month, with others in the pipeline in Leeds, Birmingham and Bristol. It has nearly 5,000 rented homes under its watch.

Saving up to buy a home is still very much ingrained in the British psyche – even with prices as high as they are. But Gordon thinks the emergence of such high-quality rental homes – rather than the traditional fare offered by part-time buy-to-let landlords – is fundamentally changing people’s attitudes about buying a house.

‘Instead of doing what they did historically, which is buy a one bedroom flat and upgrade to a two bedroom flat and then they start a family and have a house, I think people will pause and rent for longer, maybe start a family – we know 36 per cent of renters are families – and then decide where they want to buy,’ she says. With Grainger, Gordon says, renters can sign threeyear guaranteed leases – giving them a level of certainty that’s rare in the private rental market, where landlords can turf out tenants at a month’s notice. Grainger doesn’t ask for a deposit, either.

This, I venture, sounds like a very European approach to housing. On the Continent, renting is popular and doesn’t face the same levels of criticism from both sides of the political spectrum as it does in Britain.

Gordon says: ‘I used to look after units in Germany. People would live in Frankfurt or wherever and when they come to the end of their career, they’d use part of their pension pot and go and buy something in a really nice rural location.’

We meet at Grainger’s London office overlooking the Thames, just as another report suggests house price growth has ground to a halt and is even falling in some parts of London. Buy-to-let landlords are quitting the market amid the price woes and a flurry of tax rises that have made it hard to turn a profit.

Gordon doesn’t think we’ll see a cliff-edge in house prices after Brexit: ‘I think it’s what we’re already seeing, which is a slowing down of the level of sales.’

However, she hits out at stamp duty and other taxes keeping people from moving house and stopping some from downsizing. Stamp duty, she says, is ‘not necessarily a good thing’, even if it is for Grainger as it keeps people in rented homes for longer.

Since Gordon took charge three years ago, Grainger has sold off its retirement home business and its German division to focus on build-to-rent in Britain as the country grapples with the housing crisis. Its focus is not on the top or bottom ends of the market, but aimed at the ever-growing middle-classes.

Brought up in Manchester, she went to Oxford Polytechnic before going on to work for Milton Keynes Development Corporation, which oversaw the new town’s creation. After a decade at John Laing, now part of Laing O’Rourke, where she became the first female director, Gordon joined Railtrack as group property director, responsible for station developments. When it went into administration in 2001, Gordon moved to Legal & General to run its property operations before moving to Royal Bank of Scotland.

It was a mammoth job – to sell off the bailed-out bank’s £38 billion global property portfolio in the wake of the financial crisis. After managing to shrink it down to £4billion and her job nearly done, Gordon took over at Grainger. Softlyspoken and diminutive in stature, she seems an unlikely person to have climbed to the top of the notoriously maledominated property industry. A significant proportion of the attendees and trustees of the Presidents’ Club Charity Dinner a year ago – where hostesses were sexually harassed according to an undercover Financial Times investigation – PARK LIFE: Grainger boss Helen Gordon, who owns a home near Regent’s Park were property industry executives. But Gordon claims the perception of the industry as sexist is ‘a little overplayed’ and the behaviour at the Presidents’ Club ‘didn’t reflect the whole industry’.

As vice president of the British Property Federation, Gordon hopes more women can go on to run property companies, not just sit on the boards. She says there is ‘a lot of work to do’ and that the industry also needs people from different backgrounds too.

‘I feel quite strongly that it’s not just who we recruit in the industry, it’s also where they come from as well. Our industry has to reflect the people we’re building for, and quite often it doesn’t.’

She defends the housebuilders which have come under pressure for dishing out huge bonuses for bosses, claiming they no longer follow the old ‘build it, flog it and run’ mantra (some newbuild owners may disagree). That she doesn’t lay into the housebuilders doesn’t surprise me – after all, she could be running one of them one day.

Gordon, who made £1.5 million last year, doesn’t rent her own property in affluent Regent’s Park. She has owned it for 24 years.

I ask her what property advice she gives her nieces and nephews. ‘I’d probably give the advice that sits alongside our business model which is when you buy your first house, imagine yourself living there for the next ten years. And if you can’t, don’t do it.’

At least she doesn’t have to tell friends and family how much their house is worth any more. ‘Thank god for Rightmove!’ she says.

I think many will pause and rent for longer – then decide where to buy

Our industry has to reflect the people we’re building for... often it doesn’t