Is Build to Rent the key to building 1.5 million homes?

Is this Build to Rent’s moment?

The Group Director of LRG Living Markets Sales, Lettings & BTR, one of the country’s biggest estate agencies, has written to the government asking them to back the sector.

Andy Jones says that if the sector can build 60,000 units a year, it could serve 30% of tenants within 20 years, while also bringing the government’s target of 1.5 million closer. Building at that pace would get us 20% of the way to that goal.

However, that 60,000 target is some way off. Earlier this year, the British Property Federation reported that 17,309 new BTR homes had been completed in the year to April. Moreover, delivery is slowing down. The Build to Rent Alliance, which champions the BTR sector, says that there are now just 5,000 new units in the pipeline.

The slow planning pipeline isn’t just a BTR issue: the Home Builders Federation says that the number of new homes given planning permission in Q1 was the lowest in 20 years.  

But the sector also faces some specific challenges. Constructors warn that delays at the Building Safety Regulator are blocking high-rise development. Less than a third of applications are decided on within their target 12-week timeframe. A massive 87% of all UK BTR units (including completed homes and those under construction or in planning) are in multifamily buildings, so the sector is deeply affected.

The new Secretary of State for Housing, Communities and Local Government, Steve Reed, has pledged to overhaul the Building Safety Regulator and work with the London mayor to speed up delivery in the capital. The government’s incoming Planning and Infrastructure Bill could also remove barriers to building.

And the BTR sector is still receiving important backing from institutional investors. This month Lloyds Bank agreed to buy three BTR developments, which will add to their existing 4,000 unit portfolio. Meanwhile, Grainger, the UK’s largest institutional landlord, registered as a Real Estate Investment Trust last month as part of a pivot away from leasehold management and towards BTR. If the regulatory challenges can be overcome, there is demand for BTR investment.