UK Build-to-Rent – A Thriving Sector with High Tenant Demand

The build-to-rent market in the UK is experiencing remarkable growth, signaling a shift in demands within the private rented sector. Let’s delve into the key aspects driving this boom and its implications for both tenants and investors.

Changing Landscape: Build-to-Rent’s Rising Prominence

In 2023, the UK witnessed its second-highest investment in build-to-rent, underscoring the sector’s evolution from niche to mainstream within the property market. Unlike traditional buy-to-let models, build-to-rent prioritizes tenants’ needs by offering enhanced facilities, amenities, and communal spaces, fostering a sense of community and lifestyle.

Shifting Tenant Preferences: A Flexible and Stable Option

Increasingly, individuals are opting for build-to-rent properties as a flexible yet stable lifestyle choice, rather than viewing renting solely as a temporary solution before homeownership. This trend underscores the appeal of properties that provide additional amenities such as concierge services, resident lounges, gyms, and bike storage.

Scale and Growth: The Current Landscape

According to recent research from Savills, there are approximately 267,000 build-to-rent properties across the UK, with over 100,000 already completed and ready for occupancy. Additionally, there are 53,800 units under construction and 112,800 in the planning stages, highlighting a doubling of supply in the foreseeable future.

Record-breaking Investments: Fueling Growth

While 2022 marked a record year for investment in the sector, with £4.6 billion injected into build-to-rent developments, 2023 closely followed with £4.5 billion in total investment. This substantial growth is largely attributed to robust demand for rental housing, driven in part by higher mortgage costs deterring potential buyers.

Resilience Amid Challenges: Outlook and Predictions

Despite macroeconomic challenges such as elevated debt costs and inflation in material and labor expenses, the build-to-rent sector has demonstrated resilience. Strong rental growth and attractive yields have continued to attract investors, promising inflation-matching returns.

Future Prospects: Optimism and Expansion

Looking ahead, Savills projects a promising trajectory for build-to-rent over the next decade, with an estimated 360,000 homes within the sector by 2033. This optimism stems from the sector’s ability to leverage operational efficiencies and better data management, positioning it for sustained growth.

Regional Dynamics: Driving Factors

While London has been a key driver of the build-to-rent surge, the north-west region, notably Liverpool and Manchester, has emerged as a prominent investment hub. These cities offer a compelling mix of affordability and robust employment opportunities, attracting tenants seeking alternatives to London’s high living costs.

Conclusion: A Flourishing Sector

With demand for rental housing continuing to soar and investors eyeing lucrative opportunities, the build-to-rent sector in the UK shows no signs of slowing down. As cities across the country embrace this housing model, the landscape of rental accommodation is undergoing a significant transformation, catering to the evolving preferences of tenants and investors alike.

Compare listings