Property developers and investors are waking up to a big shift in the UK rental market: single-family build-to-rent (BTR) is no longer a niche, but a major player attracting serious cash. PropertyWeek recently spoke to a panel of experts, here’s our summary.

Single-family BTR, the new kid on the block:

Forget the sleek, high-rise apartment blocks. Investors are now pouring money into single-family BTR, meaning houses, not flats. Last year saw a record-breaking £1.9bn invested in this sector, a whopping 42% of the total BTR investment and a massive leap from 2022’s 8%.

But why is single-family BTR suddenly hot? Here’s the summary:

The Changing Face of Living:

• The pandemic: People want more space, but still want to be close to the action. This means suburban locations with easy access to town centres and the countryside are becoming increasingly popular.
• Soaring interest rates: Making it tougher than ever to buy a home. Renting is becoming a more attractive alternative.
• A new kind of rental experience: High-quality, sustainable homes with added benefits like solar panels are attracting renters who want a more stable and comfortable living experience.

Is Single-Family BTR Just for Families? Think Again

Don’t assume that single-family homes are only for families with children. Many people are choosing them for the extra space, a garden, or a dedicated home office.

The Numbers Speak Volumes:

• In Greater Manchester, the average combined income of single-family renters is £47,900 a year. This gets you a mortgage costing £1,400 a month, compared to an average single-family rental cost of £970 a month. This means renting could be more affordable for many.
• A large chunk (62.5%) of renters in single-family BTR homes in Greater Manchester are childless.

The Bigger Picture: Filling the Gap

• The majority of the UK population lives in suburban areas, but the majority of BTR development has been concentrated in urban centres. Single-family BTR could help bridge this gap.
• There is increasing demand for long-term rentals, with many people choosing to rent for longer periods. Single-family BTR offers the stability and security that tenants crave.

Accelerating Housing Delivery

Single-family BTR could be a game-changer for housebuilding:

• Houses are rented quicker than sold, making it less risky for developers to build larger developments.
• It could encourage more diverse housing options within developments: a mix of private rentals, social housing, and private sales.

Is Renting Still a Second-Class Option?

• The stigma around renting is fading, thanks to the rise of high-quality BTR properties. Renters are enjoying amenities like solar panels, which reduce energy bills and help the environment.
• BTR offers tenants certainty and security, knowing their rent won’t change suddenly.
• The demand is real: there were 22,000 enquiries for just 2,000 single-family BTR homes managed by Yardi in the last six months.

The Future of Single-Family BTR

The sector is expected to grow even further.

• We’ll see more aggregators – investors who buy up sites across the country and create large portfolios to attract bigger investors.
• More partnerships between major housebuilders and institutions will help unlock bigger sites and accelerate housing delivery.
• There’s a need to define the “ideal” single-family BTR house, then convince developers to build it.

The Bottom Line:

Single-family BTR is a burgeoning sector with huge potential. Investors are taking notice, and it could be the key to addressing the UK’s housing crisis while offering a more attractive rental experience for tenants.