SFH: Bridging the gap in the UK rental market?

Modern renters' needs and requirements are changing. As more and more people turn towards Build to Rent schemes and single-family homes (SFH) for secure and comfortable living, these sectors need to be able to accommodate renters throughout different stages of their lives.

Can single-family homes (SFH) bridge the gap in the UK rental market? - BTR News
Can single-family homes (SFH) bridge the gap in the UK rental market?

Currently, the middle ground between being an adolescent studying at university to entering the job market and starting a family is incredibly blurred in terms of living accommodation. Therefore, the Build to Rent and single-family Homes (SFH) sector has to fill this gap. Alan Marshall at Glide discusses this grey area, and how the sector can further adapt to meet the modern needs of modern renters.

By Alan Marshall, Account Director at Glide

The UK rental market offers a wealth of options for the various stages of adult life. From rented purpose-built student accommodation (PBSA), shared homes, Houses of Multiple Occupancy (HMOs), to Build to Rent developments, and even four bedroom homes; each providing support with each stage of adult life – learning, career development, socialising and recreational fun. But where is the middle ground? Where is the starting point for new and emerging families in the UK?

Alan Marshall, Account Director at Glide | BTR News
Alan Marshall, Account Director, Glide.

It is predicted that the number of SFH’s available in the US is set to reach 84.69m by 2023, with financial heavyweights such as J.P. Morgan Asset Management, Blackstone, and Goldman Sachs Asset Management all helping to bankroll the efforts of more than two dozen SFH rental companies. It is clear that there is significant demand for SFH in the US, and it is proving to be a highly successful vertical on the other side of the Atlantic Ocean; so where is the market in the UK?

Since its conception in the UK, SFH has seen rapid growth and development, with Savills highlighting in late 2022 that there were 15,000 units of SFH in planning – more than double from the previous year – with a total of 31 schemes being operational. With millennials and Gen Z now entering their stage of adulthood and where the idea of starting a family is now becoming a reality for many, residential areas must align with their digital demands to support working from home, e-learning, digital communication, and the shift in focus for minimised environmental impact.

Attracting Generation Rent

There is an important financial aspect associated with the rental of SFH. It comes with no overheads for maintenance costs, and there is no need for the burden of a mortgage looming over the tenant’s head. In the current economic climate, with fluctuating interest rates on top of an already volatile energy market, there is security in knowing that unexpected bills shouldn’t suddenly appear – and need paying.      

The SFH proposition specifically aims to create safe neighbourhoods in locations with in-demand factors associated with starting new families, such as proximity to employment, desirable schools, and transport infrastructure to provide easy access to these areas. These new family fundamentals are intricately analysed by developers, and SFH developments are designed around this criteria to provide viable living and working options for parents and safe havens for children. Not only does SFH provide financial security, but it creates safe home environments.

Technology can also play a prominent role in creating security. SFH developments can support new smart home features such as access control or Internet of Things (IoT) enhancements that provide an additional layer of home security, leveraging devices such as CCTV or alarm systems.    

As well as helping to secure the home, technology is integral to today’s SFH homes. With the recent social shift to working from home, e-learning, gaming and the reliance on digital communication, residents need reliable internet connectivity to operate in today’s home environment. The intricate design and scalable fibre optic connectivity in new build developments provided by companies like Glide, empowers digitally native millennials and Gen Z residents in their new accommodation, providing the essentials required for them to live, work and play in the modern world.

Fibre infrastructure not only supports lifestyle demands but can also support the sustainability generation, comprised of both Gen Z and millennials. With an increasing focus on sustainable brands and environmentally conscious products, their homes are no different. The SFH proposal supported by fibre infrastructure can consist of new IoT technology and smart home features that support residents’ goals of efficient living, minimal waste, and smaller repercussions on the planet. Moreover, the reduction in wasted utilities has an added impact on the current cost of living issues faced in the UK.

Providing Market Security for Developers

Following Savills’ report of the UK and English housing supply shortage at the end of 2022, the untapped SFH market offers an opportunity for developers to provide a solution with suburban developments in less built-up areas. This offers a better quality of life for new families in comparison to those in busy, polluted cities. SFH, with its huge growth potential, can play a key role in helping to meet housing needs and reduce the significant supply shortages in the rental market. Furthermore, it also provides a degree of diversification for multifamily investors, who can capture a more varied tenant base and diversify their portfolio in terms of locations and property type.

Gen Z and Millennials have been classified as Generation Rent for years due to being priced out of the housing market – unable to buy and having to pay a high percentage of income on rent. Recent figures suggest that up to a third of millennials may never be able to own their own home and have no other option aside from renting property their entire lives. With the focus being gathered by the SFH market, and the potential to follow suit of the American single-family or suburban rental markets, SFH offers security in demand for developers enforced by the increasing number of renters that will eventually look towards starting families while renting.

The Future Homes and Buildings Standard regulations have been set out to ensure new homes produce 75% to 80% less in carbon emissions. With the supporting infrastructure architecture, SFH can utilise technologies to create smart homes, creating efficiency through IoT. IoT technology monitors and reports on each building’s efficiency, using energy management tools, water meters, environmental conditioning monitors and more to detect and report where waste is. It also shows how to improve usage, streamlining building efficiency for building operators, developers and residents while adhering to governing body regulations for greener buildings and rigorous new energy efficiency standards.

Aligning with Market Demands

The success of a venture is outlined by the knowledge of the intended clientele, and for SFH, developers must cater towards Gen Z and Millennials. Millennials have picked up the use of technology as they have grown up, whereas Gen Z, the digitally native, are the first generation to be born into digital technology. With Gen Z and Millennials, 95% own a smartphone, 83% own a laptop, 78% own an advanced gaming console, and 57% have a desktop computer. The evolution of our dependence as a society on digital technology and digital transformation for working from home, e-learning, gaming, and socialising highlights the reliance on digital technologies and the internet to function. SFH need to support these demands for their success.

To enhance the experience of the residents of these SFH’s, developers need to facilitate the current day to day, SFH need to provide for the technological demands to retain the desire to reside within these properties. New infrastructure needs to be capable of multi gigabit speeds while supporting the demand from residents. It also needs to enable operators to manage quick and easy onboarding alongside current demands for growing technologies such as virtual reality gaming, security features, or IoT which can be carried out by ISP’s with capacity for growth, like Glide This will place the growing market at the front line for new families. Overall, SFH provides ease of moving in, the technological support, reduced operational costs and transparent environmental impact.

The internet – with its modern support of our society – is a utility, a necessity for everyday life. As with any utility, the architecture behind it needs to look forward to enabling future demands and remove bottlenecks. This requires scalable infrastructure to grow as bandwidth demands increase, the services need to be provided directly into the properties to offer symmetrical speeds for upload and download, granting faster and more seamless access to the cloud. This empowers technological capability while future proofing any development from now to 60 years into the future.