2019 saw a distinct increase in the number of new build-to-rent (BTR) units constructed, according to new data released by the National House-Building Council (NHBC).
Build-to-rent schemes are typically owned by institutional investors and managed by specialist operators. Almost 4,800 new units were completed last year, a striking increase of 57% compared to 2018. The figures prove how quickly the BTR sector and affordable housing schemes are growing apace.
When data was first collected for the year 2015, only 1,257 units had been completed. This number fell the following year before rising annually, with the figures for 2019 representing the greatest increase yet.
PRS sector to be ‘corporatised’
A spokesperson for the NHBC suggested that the latest figures would gladden the hearts of ministers, as successive Conservative governments over the last ten years have attempted to ‘corporatise’ the rental market, chiefly by means of additional onerous regulations and tax increases for buy-to-let landlords.
The latest research confirms that around 161,000 homes were built across all sectors last year, the highest figure since 2007, the year preceding the financial crisis. The number of houses built by the private sector, 112,086, was 3% lower than in 2018.
Christopher Pincher, the new housing minister, will use these positive results to defend the Government’s commitment to increasing the volume of house building across the UK.
Changing attitudes in the UK to the rental market
Mollie Crowley, Head of Lettings at Lurot Brand, commented that the increase in the BTR sector suggests that people are changing their opinion of the private rental sector (PRS), increasingly viewing service as an essential part of the deal rather than as a premium add-on.
According to a recent report from RICS, tenant demand in the PRS is currently high compared to the amount of stock available. In the three months to January, there has been a steady increase in tenants seeking property to rent and a corresponding decrease in new listings from landlords.
The BTR sector, therefore, is expected to continue to grow and help fill the gap. As more and more people opt to rent rather than buy, tenants increasingly expect a high standard of accommodation, something landlords and property investors are now prepared to take on board.
Hotspots for BTR
Although London has the greatest concentration of this type of build, the regions have witnessed the largest increase over the last 12 months. Birmingham, Manchester, Liverpool, Leeds, Sheffield and Glasgow were all highlighted in the report as areas with the greatest growth in BTR construction over the past year.
These cities also constitute some of the best places for property investment in the current market, as tenants look beyond the capital for cheaper options and landlords for better returns.
Combining greater affordability, higher rental yields and major ongoing regeneration, these areas are expected to produce the best performing housing markets in years to come.
Peter Ladhams, Managing Director of build-to-rent specialists Assael Architecture, believes that the stratospheric rise of BTR in the UK last year demonstrates the public’s appetite for innovative design in the rental market.
In his opinion, as residential housing becomes more service-oriented, rental properties will offer substantially more than just a place to live. Comprising a wide range of amenities, opportunities for social contact and benefiting from fantastic locations, build-to-rent schemes show how a professional, secure and high-quality rental facility ought to look.