The Growth of Build to Rent in the UK
What is Build To Rent?
In general terms, build-to-rent (BTR) is the sub-market of purpose-built blocks of privately rented residential accommodation designed specifically for renting rather than for sale.
The accommodation is typically:
- Bespoke designed
- Developed and owned by investors or residential developers for long-term rental
- Professionally managed
The number of UK residents renting privately has doubled over the past decade, with 4.7 million (20%) of all households now in private rented accommodation. This trend has been fuelled by a variety of factors. A shortage of housing supply and a low interest rate environment have helped push house prices up (both in absolute terms and also relative to average earnings), pricing would-be buyers out of the market. This has opened a gap in the market for BTR developers.
In 2017, the emergent BTR market attracted £2.4bn in investment and its momentum shows no signs of slowing. The Government has also demonstrated its support of build-to-rent as evidenced by research published by the British Property Federation (BPF) in May 2018, indicating that 75% of MPs support build-to-rent and its contribution to the UK housing supply.
Trends in tenure (thousands of households), 1980 to 2016-17
The Mayor of London (MoL), Sadiq Khan, has published his London Housing Strategy (the Strategy), following public consultation on a draft version in the autumn of 2017. The Strategy contains an express recognition of the housing crisis in Greater London, and sets out how the MoL will address existing housing conditions and rebalance housing supply.
To diversify the house building industry and thereby increase capacity and delivery, the MoL will provide a package of support for the BTR sector, including through planning guidance in the new London Plan, and lobbying government to exempt BTR from the 3% SDLT surcharge.
The Numbers (Q1 2017 and Q2 2018 Compared)
The BPF’s first published set of annual data on the BTR sector shows significant growth in both London and the regions. The data, which was published in April 2018, shows that the number of BTR homes completed, under construction and in planning across the UK increased by 30% between Q1 2017 and Q1 2018.