United Kingdom

Build to Rent investment grows – but can it house Britain?

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Will a growing, diversifying Build to Rent sector shake up Britain’s rental industry?

Real estate investment firm CBRE has reported that BTR investment in Q3 2022 was 85% higher than the same period in 2021. Thanks to some big-ticket deals, including a scheme of 715 BTR apartments in Cardiff, total investment for the year to date hit £2.84 billion.

BTR developers are also starting to serve a bigger slice of the market. While most developments are still urban flats, estate agency Savills forecasts that 18% of the BTR homes delivered over the next 10 years will be purpose-built Single Family Rentals: detached houses, mostly built in suburban or rural areas. According to the report, the properties are popular with ageing millennials and young families looking for more outdoor and office space, whilst being unable to afford to buy. 

Will tenants abandon BTL for BTR?

BTR backers say that purpose-built rental homes come with some big advantages. According to a study by Sigma Capital Group, which owns the Simple Life BTR housing brand, its homes are 25% cheaper to heat than homes built between 2007-11, and up to 74% cheaper than older properties. With the Energy Price Guarantee set to expire in the spring, energy efficiency could be a killer competitive advantage. The same study found that 74% of tenants think about energy performance when looking for somewhere to rent. Some build-to-rent developers have offered features that are difficult to find in traditional rentals, like accepting pets.

But tenants might struggle to find a purpose-built property to rent. Despite rising investment, there are still fewer than 75,000 completed BTR homes in the UK – and less than a quarter of a million even when incomplete and planned developments are included. The CBRE report also warned that “recent market volatility” could put off investors. Traditional buy-to-let landlords and letting agents are unlikely to face much competition from the BTR sector any time soon.

Other construction headlines

Stricter EPC targets – government urged to “get real” – Landlord Today

Forecaster says housing starts will nosedive 40% next year – Building

How a promise of 10,000 new homes turned into just 18 properties – Liverpool Echo 

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