The Build to Rent (BtR) market has been growing steadily over the last decade, with £35 billion invested in delivering 100,000 homes. But the demand for private rental homes is sky-high. We need another million homes by 2031 just to keep up. Savills, a top property advisor, reckons we need £300 billion of investment to meet that demand.

Shifting Focus: Buying Ready-Made

Traditionally, investors have been pouring money into developing BtR projects from scratch. But things are changing. Savills says that over the next ten years, £20 billion will be invested in buying up already operational BtR schemes.

That’s a huge shift. Why? Because investors are seeing the value in getting their hands on stable, income-generating properties. And it’s not just a trickle – the first quarter of 2024 saw the highest proportion of investment ever in operational BtR schemes, with 60% of all BtR investment going into buying existing properties.

Where the Money’s Going

London and the big cities – Belfast, Birmingham, Bristol, Cardiff, Glasgow, Leeds, Liverpool, Manchester, Newcastle, Nottingham, and Sheffield – are the hotspots for BtR. The value of operational BtR schemes in these areas is estimated at a massive £35 billion – £23 billion in London alone.

Why the Excitement?

This is a major shift, and it’s driven by a few key things:

• A Growing Market: The BtR sector is booming, and the demand for good quality rented accommodation is only going to increase.
• Institutional Investment: More and more big investors are taking notice. The UK is lagging behind countries like Germany and the USA, where institutions own a much larger percentage of rental properties.
• New Players: New investors are entering the market, attracted by the long-term potential of BtR.

The Numbers Don’t Lie

There are 110,000 homes in the BtR planning pipeline – the largest ever – meaning the sector is set for rapid growth. If it follows the same trajectory as the student housing market, it could double in size every couple of years.

Bottom Line:

The BtR market is maturing, and there’s a clear shift towards buying operational assets. If you’re looking for a long-term investment opportunity with strong growth potential, then the operational BtR market is definitely worth a look. It’s not just about building new homes; it’s about buying established, income-producing properties and taking advantage of a growing market.