UK: New research from the British Property Federation (BPF) and Savills predicts the number of completed BTR homes could increase five-fold to reach 380,000 by 2032.
This rate of growth would make the sector worth £170 billion, as the it becomes an integral part of UK housing delivery and economic growth.
The projection, undertaken in partnership with BTR operator Get Living and investment manager M&G, shows that by 2032 eight per cent of UK homes for rent will be purpose-built, up from 1.5 per cent today.
The analysis predicts a continued evolution in the market, with single-family homes making up almost a fifth (18 per cent) of BTR stock in ten years’ time, compared to 12 per cent today.
The research was undertaken to coincide with the 10-year anniversary of the Montague Review, a report commissioned in 2012 by housing minister Grant Shapps to remove the barriers to long-term institutional investment into purpose-designed homes for rent.
The review’s recommendations, which were adopted by government, included more support for BTR in national planning policy and Local Plans, the release of more land for development and standardisation of tenants’ rights.
The Montague Review is widely acknowledged to have marked the birth of the modern BTR sector. The Olympic Village in Stratford, which was designed as temporary accommodation for athletes competing at the 2012 London Olympic Games, became the UK’s pilot BTR scheme once converted into professionally managed rented accommodation. Now known as East Village and owned and operated by Get Living, the neighbourhood is home to 7,000 residents and further development in the pipeline to cater to growing demand.
A decade later, as at Q3 2022, £30 billion has been invested into the BTR sector, delivering 76,800 completed homes and a further 163,400 in the planning and delivery pipeline. While the sector still represents a small proportion of new housing delivery, it is growing rapidly with the number of completed BTR homes increasing by 14 per cent year-on-year in Q3 2022
Ian Fletcher, BPF director of policy, said: “The Montague Review was a significant moment that gave birth to the Build-to-Rent sector as we know it today. Ten years on we can say the review achieved its core aim of unlocking long-term institutional investment into homes for rent, helping address the chronic shortage of quality housing in an and around town and city centres and serving as a catalyst for urban regeneration. The current market conditions underline that we must continue to diversify housing supply in order to drive economic growth, and the Government must continue to look at how planning reform, more support for local authorities and the release of land for development can enable the sector to continue its upward trajectory.”
Alex Greaves, head of UK and European Living, M&G Real Estate, said: “The BPF’s findings highlight the coming of age of residential as a mainstream asset class and confirm the importance of Build-to-Rent within the wider private rented sector. Over the last 10 years, institutional investment into BTR has made a significant contribution to UK housing numbers with further growth continuing year on year. It provides professionally managed homes across a wide range of locations, price points and age groups. From an investor perspective, BTR is highly defensive in terms of cash flows, provides consistent returns for investors and offers clear opportunities to create low-carbon homes and ESG-led rental communities. We continue to explore new investment opportunities across the UK and can only see the sector growing in strength over the next decade.”
