UK Build to Rent attracts £890m investment in Q2 2022

New research shows that strong investor momentum continues in the UK Build to Rent market, with £890m invested in Q2 2022.

Watkin Jones' Sherlock Street Build to Rent development in Birmingham, which has been forwarded funding by Get Living | BTR News
Watkin Jones' Sherlock Street Build to Rent development in Birmingham, which has been forwarded funding by Get Living.

New research reveals that £890m was invested into the Build to Rent sector in Q2 2022, a 36% increase on Q2 2021. The research conducted by real estate services firm Cushman & Wakefield reinforces that the sector continues to thrive.

With average rents in the UK now £1,153 a month, up 6.7% on June 2021 and 18.6% higher than pre-pandemic levels, the report shows that investment yields remain stable. Generation rent is also getting older, with the number of renters aged between 45-54 rising by 50% in ten years, and those aged 55-64 have more than doubled – up a remarkable 111% in the same period.

The notion that renters move out of the market in their early 30s to buy a home is a diminishing idea due to stretched affordability among buyers. With a growing older renter population, renters’ living preferences could change as they ‘outgrow’ the small city centre flats, potentially impacting how the market develops in the future.

“Build to Rent yields are remaining stable, unlike other asset classes dominated by geared overseas investors. The market is therefore more insulated from the volatility around the cost of debt for the moment. The rising cost of living will put financial pressure on some renters but the longstanding imbalance between supply and demand means rents should remain buoyant.

“The market for single family housing is also a growth area, driven by changing household types and renter preferences, and is huge, at an estimated 2.9 million households. This market is only going to grow as the number of households increase, and economic pressures make it harder to become a first-time buyer.”

Millie Todd, Head of Residential Research, Cushman & Wakefield

The data also reveals an increase in the size of Build to Rent schemes coming through the planning pipeline and the mid-market is blossoming, which will provide renters with a serviced, secure and affordable option. The average size is now 308 units.

“There has been a big shift in the size of Build to Rent schemes being delivered. Investors and developers are more confident, having witnessed the success of Build to Rent over the last few years. Schemes in planning now have an average of 308 units, much larger than the first generation of Build to Rent schemes which have already completed, which were an average of 140 units.

“The UK continues to offer attractive residential yields in comparison to other European cities and investor momentum remains strong in the first half of 2022.”

Millie Todd, Head of Residential Research, Cushman & Wakefield

Currently, there are 230,000 Build to Rent homes under construction, in planning or complete in the UK. The two biggest deals in Q2 2022 includes Watkin Jones’ 551 home Sherlock Street Build to Rent scheme in Birmingham, which saw an investment of £136m from Get Living, and Bristol, where Grainger acquired the Build to Rent element of Redcliff Quarter, a £128m investment which will deliver 374 homes.