Investment and opportunities in build-to-rent grow through coronavirus

 

Life in lockdown has certainly changed many people’s attitudes towards where they live. Build-to-rent can offer tenants more than traditional buy-to-let, and demand in the sector is on the up.

Over the course of the past 12 months, the build-to-rent sector has grown by 22%. This is according to research by the British Property Federation, which shows there are now 167,853 build-to-rent properties across the UK. What’s more, completions over the past 12 months have increased by 37%, as more buildings open up to tenants.

While London is the key location in terms of existing volume, regions elsewhere are now seeing a major boost. Between Q2 2019 and Q2 2020, the number of build-to-rent homes in planning outside of London rose by 52%. This compares to just 4% in the capital, which has by far the highest number of completed units in total.

How has coronavirus affected the sector?

Due to the Covid-19 outbreak, the number of starts and completions has declined in recent months. However, with the housing market and construction sectors now getting back on track, the picture is already changing. According to Jacqui Daly, director at Savills residential research, the sector is well-positioned for recovery.

“Business strategies will undoubtedly be tweaked over coming months, but investors should take encouragement from the fact that US multifamily [build-to-rent] was one of the fastest real estate sectors to recover after the global financial crisis,” she commented.

“Investment volumes here fell to just £96m in the second quarter, but July saw a number of major funding deals and the under offer bank suggests UK build-to-rent is set for a convincing rebound in the second half of 2020.”

The private rented sector has remained relatively buoyant throughout the crisis. People’s need for homes hasn’t changed, but priorities might have. Financial insecurity could mean many remain renting for longer than they might have done otherwise. Some might not be in a position to buy, while others may see the flexibility of renting even more attractive now.

Jacqui Daly adds: “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.”

Build-to-rent as an investment option

As many people across the country have begun to rethink their housing situations, build-to-rent could offer a good opportunity for many. Unlike traditional buy-to-let, it is purpose-built for the rental market. The additional amenities the sector offers could be particularly appealing in light of recent events.

For example, the way people work has seen a major shift. New research from the Guild of Property Professionals shows that having somewhere to work at home is now a top priority to 21% of people. Many build-to-rent developments fulfil this need by offering communal workspaces and high-speed internet.

Many tenants may also now be looking to upgrade their living situations in general after spending so much time at home. Build-to-rent offers high-end, well-located and modern accommodation, with the sense of community that buy-to-let may not have.

In a report from Savills, the firm said that the “coronavirus lockdown is unlikely to dampen investors’ growing appetite”. In fact, with the sector’s continuing rise, it could prove to be a more popular option now for property investment.

BuyAssociation offers a range of build-to-rent as well as traditional buy-to-let investment opportunities. Many of our projects also come with the option for short-term rental and Airbnb. Get in touch for more information, or sign up for early access to our deals.

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Investment and opportunities in build-to-rent grow through coronavirus

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