What is Build to Rent? How it Keeps the Property Industry Thriving
Launched in 2012, the Build to Rent (BTR) initiative was introduced to counteract the detrimental effects of the UK housing shortage by providing additional residential properties for the ever-growing population.
Not only did the initiative help to reduce the lack of supply, but it also made the renting process far easier for tenants. Build to Rent is a property development solely created for renting. This type of property will have more than 50 properties within one development, and all are owned and managed by one company. For developers, the goal is to provide an in-demand, sustainable renting opportunity to a wide variety of tenants looking for long-term leases in high-quality homes, often found in the UK’s most upcoming and popular cities.
While Build to Rent has been around for a few years, it’s still a fresh concept in the UK. These homes are available to tenants for rent but not to individual investors or buyers for sale. Despite this, it’s a fast-paced, rising sector that meets the demands of residents in the UK’s accelerating rental market.
The ins and outs of Build to Rent
Build to Rent is not just an opportunity to provide the ideal tenancy experience – developers focus on upcoming areas and hotspots to create communities while building impressive homes that offer the world.
From swimming pools to gyms, to office space and even a concierge area, everything someone could need is within the Built to Rent space, making it a fantastic place to live and great value for money despite the higher rent threshold.
The Build to Rent sector has rapidly grown in recent years and has extended into the northern region, with cities like Manchester, Birmingham and Liverpool attracting incredible interest in BTR investment schemes. This has resulted in developments rising heavily outside of the traditional London area and continues to increase.
According to Capital Economics, at least 230,000 new rental homes are required across the UK to avoid a lack of available property caused by the creation of 1.8 million new households expected over the next decade.
The Build to Rent sector has grown by 14% in the year to the end of the first quarter of 2022. According to recent data provided by Savills for the British Property Federation, over 225,000 BTR homes have been delivered or are in planning in the UK, which is up from 197,000 in Q4 2020.
The revolution
Build to Rent stock accounts for just 2% to 3% of UK rental housing. With Lloyds Banking Group becoming the latest to make their way into the sector by setting up a private home rental brand called Citra Living, an estimated 50,000 homes are expected by 2030 – making it the biggest rental landlord in the UK. According to Savills, this would equate to 1% of the total UK rental stock, and many other banks and developments will soon follow suit.
For tenants in Build to Rent properties, the advantages of fantastic amenities, ease of communication with site managers and lengthier leases are unmatched. With the opportunity to have happy tenants without excessive input and ultimate transparency, developers will bring more development opportunities to a sector ready for even more growth and demand. Rents expect to grow steadily, especially in upcoming cities, which promises a healthy cash flow with protected capital growth.
The Build to Rent movement
As time passes, the UK continues to provide attractive residential yields compared to other European cities. Currently, 230,000 Build to Rent homes are in planning, under construction or now built in the UK.
Build to Rent schemes appeal to a large variety of tenants, from the elderly to families and single-resident homes. As the Build to Rent phenomenon continues to become a valuable option within the sector, the property market remains strong and healthy with the support of BTR.
The property market is one of the most stable and strongest asset classes to invest in. Thinking about starting your property journey or expanding your portfolio? Get in touch with us today to learn more.
