New research from Ascend Properties shows that SFH Build to Rent homes command an average rental premium of 21% over the wider private rented sector (PRS) market.
Analysis of Ascend and the Office for National Statistics data shows that two-bedroom SFH Build to Rent homes have an average monthly rent of £827, compared to £683 in the PRS, with three-bedroom properties at £962 against £797 across the market as a whole.
Ascend manages approximately 75% of the entire operational SFH Build to Rent asset class in the UK. Data from this portfolio for homes in the North West, Yorkshire & Humber and Midlands regions – where most homes to date are located – was compared with ONS private rental statistics for the same areas.
For two- and three-bedroom homes, there is a rental premium across all three regions, with the highest differential for three-bedroom houses in Yorkshire (27.1% higher):
The research also revealed that the premium is growing. Rents for two-bedroom SFH Build to Rent homes are 11% higher than a year ago and 20% up on 2020; in the PRS as a whole, rents increased by 5% over the past 12 months and 13% in the past three years.
Three-bedroom homes have also seen rental increases of 10% since 2022 and 15% compared to 2020 (PRS: 6% and 15% respectively). The rental premium demonstrates the higher demand from residents for SFH Build to Rent homes.
“This research shows that the modern housing offered by institutional SFH Build to Rent – built with renters in mind, with professional management – is in high demand from residents, and as such commands a significant premium. What’s more, this premium appears to be widening as the reputation of institutional SFH Build to Rent grows, an effect we expect to continue as the sector expands and awareness of its advantages grows in parallel.
“As a nascent asset class attracting significant capital, it is increasingly clear that there is a huge demand from investors for robust data that can assist in identifying the locations where SFH Build to Rent presents the best opportunities. That means information not only on rents, but demographics, incomes, school catchments and a wide range of other variables. As the leading lettings and property manager in the sector, Ascend has this information at its fingertips, and is uniquely well-placed to advise on acquisition decisions.”Paul Borrmann, Managing Director, Ascend Properties
Further analysis of Ascend’s dataset provides additional insight into occupier trends for SFH Build to Rent homes. For houses rented out for a minimum of four years, the average occupier tenancy at a single property is 960 days, while for Ascend-managed homes, the data shows a typical ‘vacancy gap’ between one family leaving and another moving in at just 17 days.
“The additional findings reinforce the importance of professional management on the success of a SFH Build to Rent portfolio. By giving residents high levels of service, such as efficient onboarding of new arrivals and swift resolution of maintenance issues, residents are both found more quickly and encouraged to stay for longer. Effective management is all about driving value through maximising rental income, and this research highlights the approach that has made Ascend the UK’s largest lettings and property manager.”Paul Borrmann, Managing Director, Ascend Properties