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Real Estate PRS

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Residential property in the UK has never seemed a more attractive investment. With a shortage of quality rental properties available and development struggling to keep up with demand, there is tremendous competition for the right assets. Nevertheless, there are opportunities available, and the returns on a good, well-managed scheme can be attractive - particularly to commercial clients looking for long-term income generating investments.

At CMS, our lawyers have worked in the residential sector for over 20 years. We are also one of the few law firms with representation on the BPF’s Residential Committee. This track record gives us a real understanding of the market. We act as a sounding board for a wide range of commercial clients, offering pragmatic advice and solutions to help them navigate the complex issues, regulation and taxes peculiar to the private residential sector.

We regularly advise commercial clients on issues relating to forward funding/forward purchasing on a leased or direct-let basis, development and property funding.

The right tax advice is essential in the PRS, given the complexities around VAT (particularly in relation to forward funding) and we have a dedicated real estate tax team which covers the whole of the UK. We also have resource in areas such as data protection, employment and eviction, and are able to offer commercial clients advice in relation to investment, acquisition and forward funding, joint ventures, asset management and disposal.

We have carried out some of the largest PRS transactions in recent years, acting for a number of significant commercial players in the market. For example, we acted on behalf of RBS in the sale of their GBP 210m residential portfolio to the US private equity firm, Apollo. The transaction involved the sale of some 1650 PRS units and 150 ground rent units, with 163 assets from individual flats and houses, to groups of flats and houses ranging to blocks with up to 160 flats across Scotland, England and Wales, making it one of the largest PRS transactions ever to take place in the UK. We also advised Aberdeen Asset Management’s Aberdeen Property Trust on one of the largest ever single purchases of existing stock in the PRS in the UK – the GBP 60m acquisition of 180 Stratford High Street.

Driving sustainability in real estate and construction
Contributing to the fight against climate change and creating social value are now priorities for the real estate and construction sectors.   The long-term nature of the built environment means that resilience and sustainability should be considered at every stage if buildings are to be environmentally and socially responsible. This brings both opportunities and challenges for the businesses that create, own or maintain it. They must consider the evolving technical, regulatory and market landscape, to ensure that their investments are future-proofed commercially, as well as environmentally and socially. This section of Bandwidth looks at some of the ESG issues that confront developers and property owners, and how they can incorporate practical solutions into their businesses.
Highlights of our Experience in PRS in the UK
The Wellcome Trust on the management of the South Kens­ing­ton Es­tate, a large residential estate com­pris­ing thou­sands of residential tenancies. GI Partners on the formation of its joint venture with...
Law-Now: Real Estate
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Key real estate issues to consider with data centres
The aim of this session is to provide an overview of datacentres and how they operate in a real estate context, but also to go more in depth into a couple of sticky points, such as the meaning of reliability in the datacentre context and to then provide individuals with ample opportunity to ask any questions they may have.
Impact of changes to registration of overseas entities and other Companies...
This programme of webinars provides a short and incisive review of some key topics relating to real estate, planning and construction in the United Kingdom.  
What’s new with the Electronic Communications Code?
This programme of webinars provides a short and incisive review of some key topics relating to real estate, planning and construction in the United Kingdom.  
Biodiversity Net Gain
Mandatory biodiversity net gain has now come into force for developments in England. This webinar will go through the many steps now required of developers and local planning authorities, how landowners can capitalise on the new regime, and key aspects of the regulations that all stakeholders in the development process need to be fully aware of.
The Building Safety Act 2022 and Student Accommodation
This programme of webinars provides a short and incisive review of some key topics relating to real estate, planning and construction in the United Kingdom.  
MEES - why are local authorities failing to enforce?
The UK government has a continued drive and commitment to reach net zero emissions by 2050. Yet as highlighted in the first of this series of publications, “MEES – are the regulations working?” the risk of MEES enforcement is low. Against a hotly discussed political backdrop, why is it that local authorities are continually failing to enforce the MEES regulations? Left alone, the existing approach serves to undermine the UK’s net zero strategy.
Taking the long view Even in challenging times, real estate investors continue to have a strong degree of confidence in the future of the sector.
Sustainable offices and EPC requirements
Investors may be moving towards the view that making offices sustainable does not necessarily equate to higher costs for occupiers.
The majority of UK real estate professionals continue to believe that London is overvalued. As our chart shows, this is very much business as usual. Over the past eight years, only 2021 - when investors began to wonder what a post-covid market might look like - has challenged the status quo. Even then, what we saw was only a significant narrowing of the gap, not a reversal. In this year’s polling, 62% of our respondents feel London is overvalued, as opposed to 6% who believe it is undervalued. These are the most bearish numbers we have seen since pre‑Brexit days.
The view from the UK
Every year we ask a cross-section of leading UK real estate professionals for their views on the market. This year we polled 270 experts, including 62 investors and 54 developers. In many ways they share the outlook of the global investors we surveyed, with long-term confidence tempered by short-term concerns. Overall, 38% reported feeling optimistic about the market, while 34% describe themselves as neutral and 28% are pessimistic. Although positive, this take on the market is unsurprisingly more cautious than the one we found 12 months ago, with sentiment falling back to levels last seen at the beginning of the pandemic as the more bullish outlook of the past two years recedes.
Global cities
As our chart shows, the genuinely ‘global’ cities remain the most appealing (albeit by slim margins), with the top four slots going to London, Paris, Tokyo and New York.