Signs that the new homes sector is struggling following the withdrawl of Help to Buy have emerged after house building giant Berkeley revealed it is to become a significant player in the build-to-rent market amid sluggish demand from buyers.

It is to rent out 4,000 new homes across 17 of its brownfield sites in London and the South East as the first step in a 10-year strategy.

Berkeley says that there is strong, unsatisfied demand for quality residential rental property built at scale in and around London, the country’s most under-supplied market, from institutional capital.

“Having sold over 1,000 homes across five sites in the last three years to institutional investors on a forward commitment basis, we now believe that adopting a more strategic route to this market will drive best value for these assets by creating a portfolio of scale, professionally managed, with proven income levels stabilised prior to disposal,” the company’s announcement says.

In-house operation

The house builder adds that it plans to lock in build costs early in the investment cycle and, by drawing on its experience in 2011-2014 when it developed and managed a portfolio of 900 homes, plans to create its own operating and management platform to provide tenants with high levels of customer service.

The platform will ensure that Berkeley can dispose of the properties individually or in stand-alone blocks at any time over the next decade.

The move comes as Berkeley announced its pre-tax profits had fallen 7.7% to £557 million in the year to April, with sales in the private market running about a third lower than the year before — but in line with expectations.

Read more about build to rent.