Birmingham is home to the biggest private rented sector in the UK outside of London. As demand continues to increase, the build-to-rent sector can help keep up with this growth.
Birmingham is one of the top UK cities and towns with the strongest demand for rental accommodation. During the next decade, Birmingham’s private rented sector (PRS) is expected to maintain its position as the largest in the UK outside of London. As the rental market is forecast to see huge growth in the coming years, Birmingham’s build-to-rent boom should continue.
Rising demand in the private rented sector
Transactions in Birmingham’s PRS totalled £326.7m last year, which was the highest amount outside of London. An additional 10,000 rental households are forecast to be added to the sector in Birmingham across the next decade, according to a study by CBRE.
The latest estimates show 21% of Birmingham’s households are private renters. During the next five years, forecasts predict this will rise to 26%. When looking at the city centre, there is a much higher percentage of private tenants, making up 56%. This is even expected to grow to 63%.
Around half of build-to-rent homes in the UK are in London. However, regional towns and cities such as Birmingham are currently attracting a surge of investment. Of the 5,000 residential units being built in Birmingham, around a third are build-to-rent projects.
Stuart Eustace, director in CBRE’s Birmingham residential and development team, said: “London has led the BTR revolution so far, but Birmingham and other regional cities, while later to the party, are now witnessing their own BTR booms.”
Growing young population
Birmingham is one of the youngest cities in Europe with nearly 40% of residents under the age of 25. Build-to-rent homes in the city mainly appeal to people between the age of 18 and 35. Most of these types of purpose-built flats are in the city centre. They offer amenities appealing to many young tenants, like communal areas and gyms.
Birmingham is home to a growing population of students, recent graduates and young professionals. Furthermore, a number of major businesses are relocating or expanding there. This means the rental market, especially the build-to-rent sector, should see major growth.
Stuart Eustace stated: “CBRE’s analysis identifies three main factors influencing greater demand for rental accommodation, including locations with higher percentage of population aged 25 to 34, high numbers of students, and the relative size of the economy. Birmingham scores highly in each of these areas. Furthermore, there is good rental growth in the city, making it attractive for investors and developers.
“Put all these factors together and Birmingham’s BTR fundamentals are solid, with strong prospects for further growth in the sector.”
BuyAssociation has a range of property investment projects available in Birmingham and other build-to-rent hotspot locations across the UK. Take a look at our investments page for more information.