Build to Rent construction is on the rise


New research shows that build to rent construction has risen by 22% over the past year. There are currently 167,853 build-to-rent homes being constructed in the UK.

Within London there are 11% more build-to-rent development and there are 46,221 new builds in the planning phase outside of the capital, a 52% increase from the same period in 2019.

The research has been commissioned by the British Property Federation (BPF).

Ian Fletcher, director of real estate policy at the British Property Federation, said:

“Our research shows investor confidence in build-to-rent housing continues, with a greater commitment from the sector today to delivering new, high-quality rental homes across the UK compared to a year ago.

“The sector will play a key role in supporting the government’s ambitious plans to ‘level up’ the country’s regions and in building a shared recovery where more people across the country, whether they choose or need to rent, will have more choice of rental properties available to them.

“The build-to-rent sector’s growth will also aid the Prime Minister’s ambitions to ‘Build Build Build’, with valuable construction jobs being created in all parts of the UK, but this requires momentum behind converting planning applications to construction starts.

“These decisions however will be on a knife-edge for the next year, as risks rise and productivity remains low as a result of Covid-19, and so the government must ensure its does not take this much-needed new investment for granted, and both our planning and tax systems give confidence to investors to make decisions today for the long-term health of the UK housing market.”

buy to rentPBC Today reported that: While professional investment firms typically finance build to rent and manage the development for the long-term, the research today also shows the breakdown of types of organisation building the new homes.

Local developers are currently responsible for building 28% of the market. The rest is comprised of UK housebuilders (27%), major UK developers (17%), contractors (14%), registered providers (9%) and major international developers (3%).

Jacqui Daly, director at Savills residential research, was quoted by PBC Today stating: “It will be a while before we fully understand the impact of lockdown on the sector, but it is clear that existing affordability issues, stricter lending criteria and the end of the furlough scheme will force aspiring first time buyers to delay buying until the wider economy recovers and underpin demand for secure, well-managed private rented accommodation.”

Advantage’s view

As Jacqui Daly states, financial challenges and uncertainty in 2020 will delay some potential buyers’ first step onto the housing ladder, making BTR developments attractive to both long-term renters and those who are saving up to buy a home.

It’s clear why a combination of affordability issues, job insecurity and banks tightening their lending criteria has made home ownership more challenging. However, long before the impact of Covid-19 on the economy was being felt, renting rather than buying was already becoming much more commonplace.

Two years ago, Sales Manager James Topping took a look at the figures, stating:

“Statistics from 2016-17 showed that the private rental sector accounted for 20% of households in England – in other words, 4.7 million properties. Growth began to accelerate around 2006/2007, and is showing no sign of abating – in fact, it is predicted that the sector will grow a further 24% by 2021, meaning that one in four people will be renters rather than owners.”

Our conclusion? Although some of the immediate financial constraints would-be first time buyers are facing at present may ease if post-lockdown economic growth continues, we expect to see healthy demand for BTR developments over the coming years. Although the financial uncertainty caused by Covid-19 may be one factor driving demand for rented accommodation, it is far from being the only reason that the private rental sector is growing.

Advantage Home Construction Insurance is a leading structural warranties specialist. Tel: 0845 900 3969, email: sales@ahci.co.uk or pay a visit to our homepage: https://ahci.co.uk/

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Advantage Home Construction Insurance (AHCI) provides structural defects insurance – operating nationally with offices in Warrington, London and Birmingham – offering development-related insurances and a service designed to give customers peace of mind.

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