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Lloyds Banking Group has quietly become one of Britain’s largest private landlords, building a residential property portfolio worth more than £2bn as part of a drive to diversify its income.
The group has purchased about 7,500 properties through its Lloyds Living division since it was launched in 2021, giving it a portfolio with assets in excess of £2bn, according to company disclosures and people familiar with the details.
The growth of Lloyds’ private home rental business means it is now a top five UK-listed residential landlord, behind only insurer Legal & General, fund group M&G and property developer Grainger.
Chief financial officer William Chalmers said last month that Lloyds Living was “a significant contributor” to growth in the group’s non-interest income in the three months to September.
The initiative was launched in 2021 as Lloyds, and other retail banks, sought new revenue streams during a time of record-low interest rates, which were squeezing profit margins at their core businesses.
However, higher rates in recent years have boosted net interest income for banks — the difference between the interest they receive from borrowers and pay out to depositors. This rise in profitability has pushed up share prices across the sector, with Lloyds’ shares now trading at their highest level since the financial crisis.
Lloyds has mostly invested in new housing estates in suburban areas, rather than blocks of flats in cities.
Its original target was for a portfolio of 10,000 properties by the end of this year. It is set to miss this but the pace of expansion has increased recently, with growth of 50 per cent in property numbers in the past year.
A report by real estate company Savills this year said the bank was among the biggest investors in single family homes in the UK in 2024.
On top of boosting its income, the push into private home rentals was seen by executives as a way for Lloyds to meet ESG objectives by offering better quality and services to renters than many existing landlords.
Lloyds said: “We are pleased with the significant progress made to grow the Lloyds Living business since its launch in 2021, and how — in line with the strategic aims set out from the start — it is helping to increase access to good quality, affordable housing nationwide and is already contributing significantly to the group’s diversified income streams.”
Separately, Lloyds last month reported a 40 per cent drop in third-quarter profits driven by an £800mn charge linked to car finance mis-selling.
Lloyds, which is the biggest provider of car financing through its Black Horse business, has now made total provisions of £1.95bn for the scandal.