Banks diversifying - landlords

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Banks as Landlords: Impact on UK First-Time Home Buyers

By The reallymoving Team Updated 11th Sept, 2025

A look at the recent trend for banks purchasing properties to rent out and what it means for First Time Buyers.

John Lewis started the trend off last year. The department store group announced it would build and furnish rental properties. It was soon followed by Lloyds Bank and Boots as the trend for retail and finance giants joining the rental market grew.

But it was the announcement by Lloyds Banking Group in August this year that most caught the eye. The Financial Times reported that the group, the UK’s biggest mortgage lender, was aiming to buy 50,000 homes by the end of the decade through its Citra Living brand.

The banking giant launched Citra Living in July 2021, apparently to satisfy the growing demand for private rented housing across the UK, although many believe the move was motivated by a need to diversify its sources of income.

The Financial Times claims to have seen an internal job advertisement from Citra Living outlining long-term targets including a ‘strategic challenge’ to own 10,000 properties by the end of 2025, with a further 40,000 by 2030.

The advert added that the new brand may consider mergers and acquisitions opportunities and/or strategic alliances’ to help it reach its targets.

Assuming it reaches its current targets, it would become a larger company than Grainger, the UK’s biggest private residential landlord, while also giving it an estimated balance sheet of £4billion and £300million in pre-tax profit.

riThey are buying new-build homes, often directly from developers, to rent out through subsidiaries like Lloyds' Citra Living, which can impact the availability of homes for individual buyers and put pressure on smaller landlords. The move is partly driven by a need to diversify income streams, as low interest rates have impacted profitability from traditional lending. 

How banks are becoming landlords

• Buying new-builds: Some banks partner with developers to buy entire blocks or developments of new homes specifically for renting out, rather than for sale to the general public.

• Using subsidiaries: They manage their rental portfolios through dedicated subsidiaries to handle the new role as a landlord.

• Focus on rental income: This strategy allows banks to generate consistent rental income and diversify their revenue streams beyond traditional mortgages. 

What this means for the UK housing market

• Reduced supply for buyers: The properties purchased by banks are not available on the open market for first-time buyers or individual investors.

• Increased competition for renters: The growth of large corporate landlords can lead to a more competitive rental market, potentially driving up rents.

• "Seismic change" for the letting market: Some analysts suggest that the large-scale investment by banks could squeeze out smaller, independent landlords.