Savills has unveiled a report emphasising the growing interest in single-family housing (SFH) within the Build to Rent sector. This comprehensive study, a collaborative effort led by Dr. Jacqui Daly, Guy Whittaker, Alistair Walters, and Corranne Wheeler from Savills Research & Consultancy, sheds light on the shifting dynamics of the rental market, offering an insightful analysis on the future of SFH Build to Rent homes.
Shift in Rental Preferences
At the heart of this study is the discernible shift in rental preferences among UK residents. Traditional private rented sectors are experiencing a plateau in growth, primarily due to a series of tax changes, including additional stamp duties and the phasing out of mortgage interest payment tax relief. Moreover, initiatives like Help to Buy, aimed at assisting first-time buyers, have further dampened the sector’s expansion.
The tightening grip of high interest rates, coupled with a challenging regulatory and tax situation, has notably weakened new Buy to Let (BTL) mortgaged lending. A survey by the National Residential Landlords Association reveals a stark loss of confidence in the BTL sector, with a significant surge in landlords intending to sell rather than invest in new properties over the next year.
The Rise of SFH Build to Rent
Amid these market transformations, SFH Build to Rent homes have emerged as a beacon of popularity, especially among young, mid to high-income professionals. This demographic includes a notable percentage of individuals in professional occupations, such as nurses, teachers, and social workers, who are increasingly drawn to the SFH Build to Rent sector.
The appeal of these homes is multifaceted, highlighting the importance of suburban locations with optimal connectivity and access to local amenities. These factors are crucial for professional workers who rely on car travel, underscoring the value of proximity to schools, green spaces, and health services.
Market Dynamics and Future Projections
The research identifies a pressing challenge: the dwindling supply of rental properties and rising rents, making it increasingly difficult for potential tenants to find suitable accommodations. This trend is exacerbated by the reduced mobility of the population, with fewer people moving homes.
However, the allure of SFH Build to Rent homes has not only maintained high occupancy and renewal rates but also prompted an increased movement of people seeking these properties. This demand is set against a backdrop of projected growth in the private rented sector, with an estimated need for an additional 800,000 to one million homes by 2031 to accommodate household expansion.
Policy Interventions and Solutions
Savills’ analysis suggests that targeted policy interventions, akin to the Help to Buy scheme, could alleviate up to 20% of the burgeoning demand in the private rented sector. Furthermore, an affordable housing building program could further ease demand by 11%, pointing to significant opportunities for policy makers to influence market dynamics positively.
A Glimpse into the Future of UK Housing
Knight Frank’s conclusions echo the findings of Savills, emphasising the acute demand for rental homes. With over half of private renters residing in suburban markets, there’s a clear indication that renting for longer periods is becoming more culturally accepted. Renters are increasingly in pursuit of higher quality homes and services, setting the stage for a transformative shift in the UK’s housing market landscape.
In summary, the Savills report not only highlights the current state of the UK’s housing market but also provides a roadmap for the future, underlining the growing significance of the SFH Build to Rent sector. As preferences evolve and the market adapts, these insights offer a crucial understanding for investors, policymakers, and residents navigating the complexities of the UK’s housing needs.