New analysis shows that the total number of Build to Rent homes either in planning, under construction or completed in the UK is up 15% between Q3 2021 and Q3 2022 – from 209,313 to 240,202. The analysis by the British Property Federation (BPF) has been conducted at the end of Q3 2022 in collaboration with Savills.
The sector continues to expand across the UK, as regions see 22% year-on-year increase on the number of Build to Rent homes under construction. The pipeline in the regions has also increased by 8% quarter-on-quarter and 22% on an annual basis, with 77,282 homes planned.
“The Build to Rent market had grown rapidly under an economic backdrop of low interest rates and low inflation over the last ten years. Current market conditions are clearly very different, but crucially there continues to be demand for high quality professionally managed homes in London and across the regions. The diversification of product to single family residential and into secondary cities highlights how the sector has evolved to date and will continue to do so to cater to need.
“The pipeline of Build to Rent homes would benefit from a more standardised planning approach. Very few local authorities have Build to Rent policies in their local plan, and therefore the application process is often bespoke and takes a long-time. For a sector that is driven by income returns, a long time in planning can put paid to many a scheme.”Ian Fletcher, Director of Policy, British Property Federation
The analysis also shows that while the sector continues to grow there are signs of a slowdown, at least in the short-term, with starts in the first three quarters of 2022 at 10,493, compared to 14,410 at the same time in 2021. Current inflationary pressures and rising interest rates are creating a challenging environment across the construction industry in the short-term.
However, the pipeline of Build to Rent homes remains robust – with 113,536 homes in planning, up 15% year-on-year, pointing to the long-term prospects for the sector. Recent analysis provides the first long-term projection for the sector, and anticipates that the number of completed Build to Rent homes could reach 380,000 in the next decade.
“The Build to Rent sector has grown strongly, with the pipeline now at over 240,000, but there’s a real need for planning efficiencies and policy support to help maintain the momentum, particularly in major cities where the private rentals market supply issues are most acute.
“Build to Rent has helped to provide new homes in areas where rental demand is intense, but new supply is not keeping pace with demand, particularly given the reported loss of rental stock as buy to let landlords exit the sector. According to Rightmove, there were over a quarter (-26%) fewer homes available to rent in the past three months compared to the pre-pandemic average, a figure that rose to -30% in London.”Jacqui Daly, Director of Residential Investment Research, Savills