Build-to-rent sector sees strong growth across the UK

Despite the COVID-19 pandemic causing delays in building and construction, the build-to-rent sector grew significantly in 2020. What is behind this growth and resilience?

The number of completed build-to-rent homes increased by 23% from 43,598 in Q4 2019 to 53,750 in Q4 2020. Additionally, 22% more projects were in the planning process and 5% more were under construction. This is according to research recently published by the British Property Federation.

Even throughout coronavirus, the build-to-rent sector has remained particularly resilient. It’s becoming an important part of the UK’s delivery of new homes. The government’s EPC date revealed build-to-rent delivered 4% of all new homes in England and Wales in Q4 2020. Additionally, build-to-rent is helping bring forward more high-quality housing to the rental market.

Ian Fletcher, director of real estate policy at the British Property Federation, comments: “The build-to-rent sector has shown its resilience throughout 2020, with investors continuing to drive the sector’s growth across every region of the UK.”

Build-to-rent hotspots

In the UK, London is home to the largest number of build-to-rent developments. In Q4 2020, the number of completed homes in this sector increased by 26% compared to the same quarter the year before. Every region of the UK also recorded positive growth in future build-to-rent supply.

The north-west of England has the largest number of build-to-rent homes outside of the capital. In that region, there are 32,395 homes complete, under construction or in planning. During Q4 2020, the north-west also saw the largest annual increase in the number of completed build-to-rent homes with a 31% rise on Q4 2019.

Ian Fletcher states: “Throughout 2020, around one in five homes completed in London have been build-to-rent – in the regions this share is lower, despite the volume of build-to-rent homes in the regions now surpassing London.

“There remains a significant opportunity for the sector to increase its share of completions in our regional cities and towns, further supporting local housing supply ambitions, and this will include more suburban houses that families can call home.”

Room for further growth

Throughout 2020, the build-to-rent sector also saw record investment. This further illustrates the stability and strength the sector is seeing. More build-to-rent developments are in the works. And there is still scope for even further growth.

Build-to-rent has become particularly alluring for both landlords and tenants. Providing high-end accommodation, build-to-rents can offer more to tenants than traditional buy-to-lets. Additionally, these properties usually come with attractive amenities and a better sense of community. Once lockdown restrictions are lifted, this will likely make build-to-rent units even more appealing for tenants.

On top of that, build-to-rent developments also often offer communal workspaces and high-speed internet. This will be especially enticing for people who continue to work from home even after the pandemic. In the coming years, build-to-rent developments will likely become especially appealing for remote workers.

“As we continue to spend more time than ever before in our homes, the pandemic has brought into sharper focus the need for high-quality housing and a solution to our country’s housing supply-demand imbalance,” Ian Fletcher concludes.

“Every housing sector will need to be firing on all cylinders, but it is hugely positive to see the UK’s rental market become increasingly professional, giving more choice to customers who either choose or need to rent.”

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