Resident demand for single-family housing Build to Rent

As the rental sector continues to face supply issues, Savills' study highlights the demand for single-family housing (SFH) Build to Rent homes.

Savills has released data showing the significance of increasing SFH Build to Rent homes | BTR News

Data from a consortium study prepared by Savills Research & Consultancy found a higher than ever rental demand in the single-family housing (SFH) Build to Rent sector. The report was authored by Dr Jacqui Daly, Guy Whittaker, Alistair Walters and Corranne Wheeler.

The purpose of the study was to consider the future potential of the SFH Build to Rent market, to identify its role in housing delivery and meeting homebuilder targets, to distinguish it from other forms of rented housing, and to quantify the number of homes that the sector could deliver as the profile on those active in delivery changes.

Combining desktop analysis and questionnaires, 25 stakeholder interviews were also conducted with key players in residential development and investment. As part of the research, workshops were also conducted with local authorities, government agencies and industry bodies.

Firstly, the study discovered that the private rented sector has stopped growing. Successive tax changes impacting residential investments (additional stamp duty and the removal of tax relief on mortgage interest payments) and the introduction of Help to Buy to support first time buyers have led a slowdown in its growth.

High interest rates combined with a challenging regulatory and tax environment has caused new Buy to Let (BTL) mortgaged lending to weaken. A recent survey conducted by the National Residential Landlords Association found that more landlords are looking to sell rather than buy investments over the next 12 months due to a loss of confidence in the BTL sector. The proportion of landlords looking to sell in the next year has nearly doubled (43%) in the past two years.

The research also found that reduced rental supply and increasing rents are making it more difficult for prospective tenants to find properties. This is partly because there are less properties available as people are moving less frequently. However, SFH Build to Rent homes have proven to be popular amongst young people with mid to high incomes. There are also a higher number of professional occupations – including nurses, teachers and social workers – living in SFH (31%) compared to the wider private rented sector (19%).

An increased number of people moving to different areas so that they can access SFH Build to Rent homes has been highlighted by the research. Suburban locations with good connectivity and road network access is an important feature for SFH schemes, with most professional workers being car dependent. The Savills Single Family Housing Investor Survey also found that local amenities are a priority for tenants. This includes proximity to local schools, green spaces and health services.

According to the home review platform HomeViews, SFH is also ranked highly by residents, with Savills’ research highlighting high occupancy and renewal rates. However, projections show that an additional 800,000 to one million private rented homes will be created by 2031. These projections indicate that regardless of any policy intervention, the private rented sector needs to expand to meet future household growth. Savills’ research found that a stimulus package similar to that of the Help to Buy scheme would help ease private rented sector demand by 20%. An affordable housing building programme would also ease demand by 11%.

Knight Frank conclude that there is a huge demand for rental homes which has been exacerbated by a slowdown in the growth of the private rented sector. More than half (54%) of private renters live in suburban markets where there is large demand for houses. In the future, renting for longer will become more culturally accepted and renters will be looking for a higher quality product and service.