Property News > Build-to-rent sector seeing strong growth

Build-to-rent sector seeing strong growth

The first quarter of 2020 has seen completions of build-to-rent homes rise by 42% against
the same quarter of 2019.

Indeed, research published by the British Property Federation indicates that the build-to-rent sector currently has 157,512 homes either complete, under construction or being planned across the UK.

A breakdown of the figures shows a 12% increase year on year in the number of build-to-
rent homes in planning, currently at 33,505, but an 11% decrease in the number of homes
currently under construction, with the current level standing at 80,771.

Ian Fletcher, director of real estate policy, British Property Federation, said: “Pain is being
felt across all sectors of the economy, but build-to-rent remains attractive to investors and
we know from past experience that demand for rental housing usually leads homes-for-sale out of any recovery.

“Our statistics show that a quarter of build-to-rent delivery is now coming from major
housebuilders and their support of the sector, through for example access to land, could
really boost growth in this sector.”

Outside of London there were 58% more build-to-rent homes completed year on year.

However, completions have increased by just 2% year on year in the capital, while there has been a 10% fall in the number of homes in planning.

Fletcher added: “One concern is the London pipeline – the statistics show a sharp decline in
the number of homes in planning across the capital.

“London was a leader in championing build-to-rent and the sector’s role in adding much-
needed new homes to its housing market.

“The imbalance between housing demand and supply has not gone away, and if anything
the impact of coronavirus has shown us that a safe and secure home for everyone is
fundamental, and we should be doing everything we can to ensure the capital’s housing market delivers for everyone.”

Currently, 28% of the market share in the property building industry is held by local
developers, while UK housebuilders and major UK developers hold 27% and 17%
respectively. The rest is made up of contractors (14%), registered providers (9%), and major
international developers (3%).

Jacqui Daly, director of Savills residential research, said: “We’d expect high levels of
uncertainty to increase demand for rented accommodation as people look to avoid longer
term commitments such as mortgages, or if borrowing remains more constrained.

“At the same time, we expect to see the leveraged buy-to-let sector to remain under
pressure, driving demand into build-to-rent.

“This means that once lockdown is lifted, build-to-rent developers should be confident to
progress stalled developments.

“Also, housebuilders will face particular pressure to restore their sales rates when
restrictions on doing business are lifted so we could see a greater role for build-to-rent to
absorb stock.

“Housebuilders now account for 27% of the total build-to-rent pipeline compared to just 10% just three years ago. We could see this share increase significantly over the coming
months.”

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