In recent years, the Build To Rent (BTR) sector in London has become a significant aspect of the city’s property market. However, a new report by national consultants Lichfields has raised concerns about the challenges and inconsistencies faced by this sector due to varying local council policies in London.
Understanding Build To Rent (BTR)
Before delving into the specifics of the report, it’s important to understand what Build To Rent is. BTR refers to properties that are specifically designed and built for rental purposes, offering tenants high-quality, well-managed living spaces. This sector has gained popularity as it caters to the growing demand for rental properties in urban areas like London.
Key Findings of the Lichfields Report
Inconsistency in Local Planning Policies
The report highlights a significant inconsistency in how BTR is addressed across London’s 35 local planning authorities. Surprisingly, 46% of these authorities do not mention BTR in their local plans at all. This lack of uniformity and recognition of the BTR sector poses a challenge for developers and investors looking to contribute to this market segment.
Concentration of BTR Developments
Another finding is the concentration of bespoke BTR developments in just a few boroughs. Brent, Newham, Ealing, and Enfield account for 41% of all BTR developments obtained through specific planning applications. This uneven distribution suggests a disparity in how different boroughs view and support BTR projects.
Call for Proactive Local Policies
Adam Donovan, a co-author of the report, emphasizes the need for boroughs to adopt more proactive and aligned planning policies. The current approach, which fails to differentiate between ‘for sale’ housing and BTR schemes, complicates the planning process for BTR projects. Each BTR application requires individual justification, making it a more complex and lengthy process.
The British Property Federation Study: Additional Insights
Complementing the Lichfields report, a study by the British Property Federation, conducted with Savills, provides further insights. It notes an 11% year-on-year increase in the total number of BTR homes in the UK, with significant growth in completed homes and those under construction or planning. However, the study highlights specific challenges in London, particularly the sharp increases in build and financing costs, which are stalling the delivery of larger BTR schemes. The reduced number of new starts in London, as evidenced by the figures from recent quarters, reflects these difficulties.
Implications for the Future of BTR in London
Opportunities for Improvement
Despite the challenges, both reports agree that there are significant opportunities in the BTR sector. With proper support from local authorities, BTR can play a crucial role in meeting London’s housing needs, offering affordable options and contributing to community development.
The Need for Policy Reform
The reports collectively call for a reform in local authority planning policies. By differentiating between BTR and ‘for sale’ housing in policy frameworks, and introducing more flexibility in development management policies, local authorities can better facilitate the growth of the BTR sector.
Impact on Investors
For potential investors, these reports shed light on the complexities of investing in London’s BTR sector. While the opportunities are significant, understanding the local planning landscape and the challenges it presents is crucial for making informed investment decisions.