Gatehouse Bank: Islamic lender revolutionising the UK's rental market

While the pandemic was a challenging time for any UK lender specialising in home finance, Gatehouse Bank is a UK financial institution with a difference.

Not only is it among a handful of fully Shariah-compliant banks, it also lends heavily to borrowers across the globe, particularly in the Gulf region with the UAE and Kuwait its two key overseas markets.

Despite temporarily lowering its finance offerings to UK and overseas customers at the start of the crisis, the bank has emerged from the pandemic with a robust balance sheet.

The lender returned to normal business when the property market reopened in July 2020, with new GCC customers increasing by more than 10 per cent in the first half of 2021.

Gatehouse is looking to change the way tenants are treated in the UK’s rental market through its flourishing build-to-rent portfolio.

It offers affordable, two and three-bedroom homes, which come with features such as built-in wardrobes, white goods, turfed gardens with sheds and private parking, that are built specifically for the private rental market in the UK. It puts heavy emphasis on tenant services.

Rather than grappling with poor plumbing and faulty boilers, tenants renting from Gatehouse Bank can call the bank’s maintenance team, with staff arriving promptly in branded uniforms to fix any issues.

“It will revolutionise the rental market going forward,” Paul Stockwell, chief commercial officer at Gatehouse Bank, tells The National. “What we are talking about here are modern two or three bed houses, newly built for the private rented market, but actually, they're very affordable.

“We offer those as institutional managed properties and we adapt them for the private rented sector. All the white goods are standard, the boilers are all the same. A lot of them have car chargers now. That’s the way forward for the rental market.”

Raising the bar in Britain's private rental market
Gatehouse considers itself “an early mover” in the build-to-rent market, first investing in 2014 as it looked to replicate the North American model of building high-quality affordable rental properties in key locations to meet the growing demand for new-build rental homes for families.

“This model has been very successful in the US since the global financial crisis and now it's becoming pretty big in the UK as well now,” says Mr Stockwell.

Over the past decade, there has been a significant increase in the proportion of households with children in the private rented sector, up from 30 per cent in 2008-09 to 37 per cent in 2018-19, according to the Ministry of Housing, Communities & Local Government, highlighting the need for a broader range of high-quality family-friendly rental options.

“We work with house builders, taking anything between 50 and maybe 120 units to support the local private rented sector market,” says Mr Stockwell.

In January, Gatehouse sold its first fund in January, a 918-home single-rental family portfolio to Goldman Sachs for £150m – the largest single family housing transaction in the UK.

“That was a real achievement for the bank to exit out of the first fund. And these funds have performed really, really well during the pandemic, we've got really strong occupancy rates of 98 per cent,” says Mr Stockwell.