The UK’s build-to-rent (BTR) sector is not just surviving but thriving, showing an impressive 11% year-on-year growth as of the end of Q3 2023. According to recent research by The British Property Federation (BPF), in partnership with Savills, the total count of BTR homes either completed or in the pipeline has escalated to a notable 263,694, a leap from 237,554 in the previous year.
A Closer Look at the Numbers
The growth is evident across various stages of development:
- Completed Residential Units: An increase of 11% has brought the number to 82,660.
- Properties Under Construction: These saw a 12% rise, amounting to 52,852 units.
- Homes in Planning: A 10% growth, resulting in 102,042 homes.
Ian Fletcher from the BPF highlights the increasing demand for specifically designed rental homes, especially in London and major cities. However, there’s a caveat; project delivery faces challenges such as inflation uncertainties and interest rate fluctuations, causing particularly complex projects in London to stall.
Regional Resilience vs. London’s Slowdown
Regionally, the BTR sector exhibits robust activity, accounting for 60% of all completed and pipeline BTR homes. Here’s a breakdown:
- Homes Under Construction: A notable 16% year-on-year increase in regional cities, totaling 40,231 homes.
- New Starts in Q3 2023: Regional cities saw 3,339 new homes starting.
In contrast, London’s figures are less impressive. New starts in Q3 totaled a mere 434 homes, with homes under construction in the city witnessing only a 5% year-on-year increase.
Nationwide Expansion and Local Authority Involvement
The report sheds light on a significant spread of BTR developments across the UK. Now, 200 local authorities have granted permissions for BTR developments or have projects in the planning pipeline, a substantial increase from just 100 five years ago. This underlines the sector’s rapid growth nationwide.
The national planning pipeline reveals:
- Homes with Detailed Planning Permission: 57,214 homes.
- Homes at Detailed Application Stage: 25,792 homes.
Savills’ Insight: A Shift in Demand
Jacqui Daly from Savills points out the potential impact of higher interest rates, as signaled by the Bank of England. This could mean a weaker demand for homes for sale in the short to mid-term, which in turn fuels the demand for BTR. With this shift, the sector is not only expanding beyond major cities but also diversifying its offerings, including a mix of single-family and multi-family products. This evolution is set to make BTR an increasingly vital component of the UK’s overall housing supply.
Conclusion: The Future of Build-to-Rent
The UK’s BTR sector demonstrates resilience and growth, especially in regional cities. Despite challenges in London, the nationwide expansion and increasing local authority involvement indicate a bright future. As the sector adapts to changing market conditions and diversifies its offerings, it stands poised to become a key player in meeting the UK’s housing needs.