The UK housing market is changing, and some investors are already making their move. The days of traditional buy-to-let are fading, but a new opportunity has emerged: Single Family Housing (SFH) built specifically for rent.
This isn’t just another trendy fad. This is a genuine shift in the housing landscape, driven by a perfect storm of rising demand and shrinking supply.
The Rise of the Suburban Market
Last year saw a staggering fivefold increase in investment in SFH properties, with investors pouring a record £1.9 billion into building or acquiring over 6,200 homes. That’s more than 40% of all Build to Rent investment in 2023, the latest report from Knight Frank shows.
The number of SFH units, including those already operational and those in the pipeline, has nearly tripled since 2018.
This isn’t just a flash in the pan. 71% of major UK investors in the Living Sector (student accommodation, Build to Rent, and seniors housing) are now planning to target SFH in the next five years, up from just 45% who were investing in it recently.
Why the Sudden Shift?
It’s simple: Demand is soaring while supply is plummeting.
The number of houses available to rent in the UK has dropped by 41% compared to the average between 2017 and 2019. This is especially true for two and three-bedroom homes, the prime target for families seeking SFH rentals.
What’s behind this shortage? Renters are staying put for longer. Back in 2012, only 19% of private renters had lived at the same address for more than five years. Now, that number is 30%.
At the same time, private landlords are feeling the pressure. Rising costs, stricter regulations, and uncertainty about the future are causing some to scale back their portfolios or even exit the market entirely. This further squeezes supply.
Meanwhile, affordability in the sales market has become increasingly challenging for many, pushing more people towards renting, especially families. Higher mortgage rates are making it even harder to buy, creating more demand for quality rental properties.
The Opportunity Awaits
The SFH market is a perfect storm: High demand, low supply, and a growing investor appetite. This imbalance will continue to push up rents, creating a lucrative opportunity for those willing to invest in building or acquiring high-quality SFH properties.
The report concludes that SFH can play a critical role in increasing housing supply at a time when the demand for good quality and sustainable rental housing, particularly for families, is acute.
This is your chance to get in on the ground floor of a rapidly growing market. The time to invest in the SFH sector is now.