Interview with Jeroen Spoor, Chief Investment Officer (CIO) at Build Finance:
Build Finance offers banks, insurers, and pension funds an investment mandate in rental mortgages with a minimum investment of €100 million. Jeroen Spoor, Chief Investment Officer (CIO) at Build Finance, answers some frequently asked questions about investing in rental mortgages.
What are rental mortgages?
Rental mortgages are loans to real estate investors secured by rental properties. At Build Finance, we provide these types of loans ranging from €2 million to €15 million to professional real estate investors focusing on independent rental properties in the social housing and mid-market rental segments
Why are rental mortgages an interesting investment for institutional investors?
Regular mortgages have been a popular investment for insurers, pension funds, and medium-sized banks in recent years. The downside of this success is that the returns on these mortgages have become less attractive. Interest rates for rental mortgages are currently two to three times as high, while the capital requirement for Basel IV, for example, is only about 40% higher
Is there sufficient demand for these types of loans?
Absolutely! In the first five months since we launched, we've already received over €300 million in applications. By slightly adjusting our proposition—specifically to better compete with the major banks—we can now accommodate even more applications
Are there any risks and if so, how does Build Finance deal with them?
With the arrival of several new players in the rental mortgage market, several providers have broadened their risk profiles. They offer higher financing options and lower repayments, which entails a higher refinancing risk. Moreover, the housing market is, of course, under intense scrutiny from politicians: there's a significant shortage of affordable homes for sale and rent, the Netherlands needs to become more sustainable, and the role of private landlords is being debated. At Build Finance, we naturally have our own opinions on this. We'll be devoting special attention to this topic soon, so keep an eye on our social media!
