Wise Living reflects on SFH BTR, with 2024 predictions

Wise Living reflects on 2023’s SFH Build to Rent market and provides predictions on how 2024 could unfold for the sector.

Paul Staley, Director at Build to Rent specialist, Wise Living | BTR News
Paul Staley, Director at Build to Rent specialist, Wise Living.

Paul Staley, Managing Director of single-family housing (SFH) Build to Rent specialist Wise Living looks back on 2023, while sharing his predictions of how 2024 could unfold. Paul expresses how enlightening it has been to see how much SFH Build to Rent has outperformed the market norm.

Paul highlights Build to Rent’s surprising resilience throughout another challenging year for the residential market. He also offers commentary on the 2024 upcoming general election and its effect on Build to Rent, and provides statistics from Wise Living’s 2023 performance. 

By Paul Staley, Managing Director, Wise Living

We’re entering 2024 with a very different mindset to 12 months ago. At the start of 2023, there was a lot of excitement and positivity about where Build to Rent could be headed, backed up by predictions from Knight Frank, stating a view of a sector on the cusp of a £102bn investment injection before 2028. Yet the economic and geopolitical events of this year put these hopes – and many more across all sectors – largely on ice. 

As someone that’s worked in property and specifically Build to Rent for more than a decade, not a lot surprises me anymore. Though I’m sure I’m not the first to admit that even I didn’t expect the challenges over the past few years to persist into 2023. However, with inflation finally falling, leading to better affordability levels, the economic indicators moving into 2024 are reassuring and it could be the year that looks to break the chain.  

I anticipate we will see a flurry of new entrants to the market, alongside increased activity for those already involved as investors re-address and re-balance their portfolios. Investors and fund managers looking to increase their presence in residential are moving away from logistics, office and retail sectors, which are still undergoing significant structural adjustments – and within that, we’d hope to see SFH Build to Rent rising in popularity.

Despite the obvious difficulties facing the residential housing market in 2023, it has been enlightening to see just how well SFH Build to Rent has stood up to the challenge and, from our experience, outperformed many other sectors. The properties we manage have provided returns that exceeded our investors’ expectations. We’ve experienced double digit rental growth, rising to 10.1%. Occupancy rates remained stable at 98.69%, while our bad debt fell to less than 0.1%.

The strength of the market is backed up by Savills’ Q3 figures, showing an 11% rise year-on-year of completed Build to Rent homes, with 112,511 more homes in the pipeline. Within this, SFH is proving itself to be a particular area of growth, with 28,000 of these pipeline homes coming from the sector. Still, there’s plenty of opportunity for more investment – statistics from the English Housing Survey in December 2023 found that 800,000 households are looking for new rental properties. The current pipeline will only fulfil 3.23% of this demand.  

It’s difficult to predict everything that could happen this year, but one thing I am sure of is the continued instability of housing ministers. I wouldn’t be surprised if we see a few more people in that post during 2024, which will only add to the struggles with the already broken planning system. I’ll certainly be interested to see how Labour would propose to tackle the ongoing planning problem, following the pledges made in the Autumn Statement. 

Regardless of politics, I’m excited to see how a stronger economic and residential market will impact Build to Rent, which has already proven itself a clear winner throughout ongoing market turmoil – those that invested early are reaping the benefits that come with taking risks. This will also be the case for those that enter the sector now, with plenty of rewards to come once confidence is restored. 

Overall, I remain positive and excited for the prospects of SFH Build to Rent and the wider residential sector. It’s always wise to head into any new year with caution, especially amid a landscape of growing geopolitical tensions and closer to home, an upcoming UK general election, but we’re primed and ready to tackle any challenges that 2024 may throw and are confident we’ll have another successful year.