More proof of the developing UK private rental sector is provided by the UK’s first government-backed fund of build-to-rent homes. The PRS reit (real estate investment trust) has started trading on the stock exchange having raised £250m from investors during its initial public offering in May.

The fund, the first UK vehicle dedicated wholly to the asset class, will be run by Sigma PRS Management, part of Aim-listed property developer Sigma Capital. Its portfolio will include homes in large English towns and cities across the country. Sigma has two property companies – developer Countryside and housebuilder Keepmoat – as partners in growing the portfolio of homes.

Some wealth managers have appeared cautious about investing in the fund but are watching the progress of this new initiative “with interest”. Others remain unconvinced by the departure from normal government-backed enterprises such as social housing or medical surgeries which have a more reliable cash flow.

These concerns are fuelled by the recent decline in residential rents, particularly in the London area where the average rent on newly-let properties fell for the sixth consecutive month in April 2017. However, in other parts of the country (particularly the North East and North West), the market is more buoyant and the estate agency, Savills, are unconcerned by short-term fluctuations. Their opinion is that “there are really strong fundamentals underpinning the PRS Reit”.