In Q1 2020, a large number of schemes completed, driving up the volume of operating units by 42% on Q1 2019 – which equates to an additional 13,000 homes. In Q2 2020, the impact of the first Covid-19 lockdown was sudden, with three funding deals worth £96m and 1,800 starts across a dozen sites.
“Since 2016 cumulative Build to Rent completions are forecast to have quadrupled by 2021 to over 60,000. Quarterly data for Q3 2020 indicates circa 37,000 units are under construction and approximately 84,000 are in planning. However, several additional proposals were announced in October and November which suggest over 90,000 are expected to be in planning by the end of 2020”.Alex Blagden, Senior Researcher at AMA Research and Editor of the Build to Rent Market Report
In recent years, the Build to Rent sector has seen an influx of institutional investors enter the market, as the focus for investment propositions moves towards developments which are likely to provide higher return than investment in high street retail.
There has been a worsening shortage of affordable build to sell housing – particularly for the 25-34 age group of first-time buyers. This had been led by a younger workforce, population growth, tighter mortgage requirements and increasing house prices.
Several larger housing associations have also diversified into the PRS. Due to budget cuts to housing, they’ve had to find other income sources – for example through developing housing for both sale and private rent.
“A key factor contributing towards forecast growth has been important changes in the planning system. Now BTR is formerly defined as an asset class in its own right in the National Planning Policy Framework (NPPF) and is entitled to specific land allocation rather than having to compete with build-to-sell developers in the open market”.Alex Blagden, Senior Researcher at AMA Research and Editor of the Build to Rent Market Report