UK: New research from Ascend Properties shows that new SFR homes command an average rental premium of 21 per cent over the wider private rented sector (PRS) market.
Analysis by Ascend and Office for National Statistics (ONS) data shows that two-bedroom SFR homes have an average monthly rent of £827, compared to £683 in the PRS, with three-bedroom properties at £962 against £797 across the market as a whole.
Ascend manages approximately 75 per cent of the entire operational SFR asset class in the UK. Data from this portfolio for homes in the north-west, Yorkshire & Humber and Midlands regions was compared with ONS private rental statistics for the same areas.
For two- and three-bedroom homes, there is a rental premium across all three regions, with the highest differential for three-bedroom houses in Yorkshire (27.1 per cent higher). The research also revealed that the premium is growing. Rents for two-bedroom SFR homes are 11 per cent higher than a year ago and 20 per cent up on 2020; in the PRS as a whole, rents increased by five per cent over the past 12 months and 13 per cent in the past three years.
Three-bedroom homes have also seen rental increases of 10 per cent since 2022 and 15 per cent compared to 2020 (PRS: six per cent and 15 per cent respectively).
Paul Borrmann, managing director of Ascend Properties, said: “This research shows that the modern housing offered by institutional SFH Build to Rent – built with renters in mind, with professional management – is in high demand from residents, and as such commands a significant premium. What’s more, this premium appears to be widening as the reputation of institutional SFH Build to Rent grows, an effect we expect to continue as the sector expands and awareness of its advantages grows in parallel.
“As a nascent asset class attracting significant capital, it is increasingly clear that there is a huge demand from investors for robust data that can assist in identifying the locations where SFH Build to Rent presents the best opportunities. That means information not only on rents, but demographics, incomes, school catchments and a wide range of other variables. As the leading lettings and property manager in the sector, Ascend has this information at its fingertips, and is uniquely well-placed to advise on acquisition decisions,” he added.
