UK: The British Property Federation (BPF) has published research showing that the time required for BTR planning applications has significantly increased over the past decade.
The BPF analysis showed that 40 per cent of sites achieving detailed planning permission last year took at least a year to do so.
Conducted at the end of Q4 2023 in collaboration with Savills, the research examined planning trends in isolation for the first time. The proportion of BTR developments taking more than a year to receive planning consent increased from seven per cent in 2014 to 40 per cent in 2023.
Figures were consistent despite variations in scheme size and location, suggesting planning times are getting longer because of the application process.
Ian Fletcher, BPF director of policy, said: “The Build to Rent market has grown significantly throughout the past decade. While reaching such a significant milestone (100,000 homes) for the sector is encouraging, we must ensure current challenges are temporary. Sentiment certainly is improving, and when interest rate cuts become real, rather than talked about, I would expect the sector to expand rapidly, given the strong pipeline of units that exist with planning permission. We lead an ambitious sector that delivers a great product.”
“A target of 30,000 desperately needed rental homes a year is eminently doable, but it requires support. The research we are making available illustrates one of the structural challenges to the sector – time in planning is getting longer. Whilst we cannot say for certain what part of the planning process is leading to increased times, it is crucial to recognise that the more drawn out the development process, the longer it takes to get to an investor’s goal – income. It does, therefore, matter a great deal and is a brake on the growth of the sector,” he added.
The number of BTR homes with detailed permission in Q4 2023 was 58,000, the highest number on record, suggesting a strong pipeline of future growth. However, starts have fallen over recent quarters, dropping to 12,500 units in Q4 2023, from a post-pandemic peak of 25,000 units in Q3 2022.
Guy Whittaker, head of UK BTR research at Savills, said: “Investment into Build to Rent proved resilient in 2023, despite challenges around the cost of debt and continued material and labour-cost inflation. Investment continues to be directed towards development and the deals struck this year will ultimately deliver 12,000 much-needed homes for private renters.
“Investor appetite continues to grow, but the time taken to bring homes through the planning system, as our research demonstrates, remains a challenge. With schemes taking longer to work their way from application to permission, this reduces the number of ‘oven-ready’ sites, given investors are unlikely to take planning risk. Boosting the number of consented sites is therefore crucial to allow the sector to deliver on its huge growth potential,” he added.
The sector continues to expand across the UK, as the regions saw a 23 per cent year-on-year increase on the number of BTR homes under construction – almost double that of London (12 per cent).
The BPF analysis shows that the regional BTR pipeline has also increased by eight per cent quarter-on-quarter and 22 per cent on an annual basis, with 77,282 homes planned. Completions in London reached 46,700, compared with 53,600 in the regions.
