Although London is currently the UK’s build-to-rent capital, partly due to its proportionately higher number of renters compared to owner-occupiers, the regions have begun to gain on the city with hotpots popping up across the country.
Since the government granted build-to-rent more emphasis in its national planning policy, the sector has made huge gains and local authorities outside London have begun to open their doors to more build-to-rent developments.
Current hotspots include Manchester, Liverpool and Bristol which all have huge numbers of build-to-rent units either completed, under construction or in the planning phase. The north-west as a region had 29,600 such homes by the end of quarter one this year – the highest after London – followed by the south-east with 7,101, while the West Midlands had 6,378, according to research by the British Property Federation (BPF).
Development is on the rise across the UK
Across the country, construction numbers in the sector have risen by an average of 30% in Q1 2018 compared to Q1 2017, with a 45% rise in the number of completed developments (from 14,371 to 20,863), a 47% jump in those under construction (from 53,982 to 63,955) and a 19% rise in the number in planning (from 90,761 to 117,893).
London now holds 51% of the total UK market, with the other 49% held by the rest of the country’s regional cities combined, but the gap has been narrowing.
“The development pipeline is growing strongly at both ends,” said Jacqui Daly, director in research at Savills.
“At this rate of growth, we expect that the build-to-rent pipeline could double to around 200,000 within the next two years.”
How build-to-rent is changing…
One of the benefits of investing in build-to-rent is that it provides a steady stream of rental income, with some developers offering guaranteed rent for a limited amount of time after purchase, while longer contracts can also minimise void periods and generate the best rental profits. While popular with institutional investors, individuals can also take advantage of the booming market, and councils and housing associations are also getting involved.
In the capital, London mayor Sadiq Khan recently set a target for 35% of developments to be affordable housing, and developers offering this in the capital can be “fast-tracked” through the planning process.
Across the UK, as the renting demographic changes from predominantly young people towards more families, the sector has come under pressure to create more family-friendly build-to-rent accommodation. According to Savills, 17% of all the schemes in planning or under construction now consist of houses as well as flats, which appears to be addressing this issue.
