★★★★★

Rated Excellent

UK Property Finance

Build-to-Rent Rivals Buy-to-Let as Demand for Rental Property Increases

by | Feb 11, 2022 | Other Finance News

The hot topic of conversation among investors and developers at the moment is the exponential growth of the build-to-rent sector over the last few years. With the ever-increasing demand for rental properties, it isn’t surprising that this niche area of the property market has really taken off.

Up until now, the build-to-rent industry has been mainly led by London, but there are many regional towns and cities that are following suit, leading to a prediction by Savills that the size of the sector will double over the next few years.

Build-to-rent developments are giving the buy-to-let market some serious competition as they are tailored to suit the needs of today’s typical renter, often offering facilities that wouldn’t be seen in a traditional BTL property.

These BTR developments tend to be backed by institutional investors; however, there are always opportunities for individuals to invest in these projects.

The BPF (British Property Federation) has been analysing the performance of the build-to-rent market in order to report on its importance in tackling the housing shortage for UK renters.

While the sector has previously been more predominant in London, there is a significant increase in investment into BTR developments in other areas of the UK, particularly in the North. The last twelve months have seen 13,527 new homes currently under construction in regional cities, which is three times the number seen in London.

BPF director of real estate, Ian Fletcher, says: “The build-to-rent sector continues to expand rapidly, and in 2021 we started to see signs that delivery across the regions is beginning to outpace London.

“It is not just about increasing housing provision; it is a major economic driver, helping attract and retain skilled workers and serving as a catalyst for urban regeneration.

“The strong growth of the BTR sector across the regions will support the government’s levelling-up initiative and help revitalise town and city centres.”

The growth of the build-to-let sector can be mainly attributed to the desperate need for affordable rental property, as demand is significantly higher than supply. With more people taking on mortgages later on in life or deciding that they prefer the flexibility that the renting world offers, it can be safely predicted that the market for BTL will continue to grow in strength.

Buy-to-let developments are typically looking at long-term residents when it comes to the facilities that they offer. For example, communal outside spaces, workspaces, gyms, and other conveniences would suit today’s modern living, particularly for people who work from home.

Data released by BPF shows 70,785 buy-to-rent units in the UK, an increase of 26% from the previous year. 141,215 BTR properties are under construction or currently being planned, which is an increase of ten thousand since 2020.

Manchester, Sheffield, Birmingham, and Liverpool have seen a year-on-year rise of 27% in buy-to-let properties under construction. This is an increase of around 26,820 as of the last quarter of 2021.

Jacqui Daly, a director of residential research at Savillssays: “The geographic spread of build-to-rent shows that many more local authorities are beginning to understand the need for new rental stock, and planning consents are rising as a consequence.

“At the same time, BTR is becoming hugely competitive for investors, with a record level of capital deployed in the sector in 2021. If investors are able to find markets and stocks to invest in, we expect delivery in the sector to double within a few years.”

Another vital advantage of the growth of the build-to-let market is the positive impact it can have on the environment, as developments are designed to support the government’s ESG (environmental and social governance) targets.

Robert Sloss, group chief executive and founder of HUB Residential, says: “City living in well-designed buildings can significantly reduce residents’ carbon footprints, so it is encouraging that metropolitan BTR is increasingly in demand across the country. We want to see an intelligent and measurable approach to carbon reduction and ESG.”

Recent Posts

Key Housing Market Predictions for 2025

As we step into 2025, the UK housing market is poised for notable changes, particularly concerning mortgage rates. Recent analysis suggests a favourable shift for prospective homeowners and investors. Projected decline in mortgage rates The consumer body Which?...

How a Secured Loan Calculator Can Help You Make Smarter Financial Decisions

When contemplating a secured loan, the financial risks can be significant. Whether you're planning a home renovation, consolidating debt, or purchasing a vehicle, understanding your borrowing power and repayment terms is crucial. A secured loan calculator is a...

What is the Normal Completion Time for a House Sale, and Can Bridging Finance Speed It Up?

When buying or selling a property, one of the key milestones is the completion date, the day when the sale is finalised and ownership is transferred. However, many people are unsure about the typical completion time for a house sale and how they can potentially speed...

UK House Prices Rise to a New All-Time High as Mortgage Rates Fall

The average London price increased 3.5% to £543,308, its highest since November 2022, when it was £545,568. Falling mortgage rates have driven house prices to a new all-time high, according to fresh data from big lender Halifax released today. The average price of a...

House Prices to Rise in 2025 as Buyers Could Get Bigger Mortgages

One mortgage provider predicts that house prices might climb dramatically next year since declining interest rates will increase buyers' borrowing capacity. Based on latest data from the Office for National Statistics, MPowered Mortgages projects a significant...

NatWest Increases Rates, Surpassing a Key Benchmark

The news arrives as average rates for two- and five-year mortgages begin to rise. For the first time in three months, the average rates for the two most popular loan terms have gone up. The average rate for a two-year mortgage increased from 5.36% to 5.37% since last...

Top Questions to Ask Your Bridging Loan Lender Before Signing the Deal

Bridging loans provide fast access to funds when you’re purchasing a property, making renovations, or managing short-term cash flow issues. Before committing to one, it’s crucial to understand exactly what you’re signing up for. To ensure you make a well-informed...

Martin Lewis: A Trusted Financial Voice, But It Takes a Toll

Martin Lewis is dedicated to empowering people to take control of their finances and make their money work harder. Unlike many financial experts, he avoids assuming his audience has extensive financial knowledge. Instead, he communicates in clear, simple terms and...

Where to Find Bridging Loan Advice Online

When it comes to financing property purchases, bridging loans can be a valuable solution. Whether you’re buying a new home before selling your old one or need quick access to funds for an investment property, bridging loans offer short-term financial help. But knowing...

Homebuyers Feel The Property Market is Too Competitive.

According to Market Financial Solutions’ latest research, people who are looking to purchase homes are urging the government to take action on the highly competitive and stressful nature of the UK housing market. The speciality lender commissioned an independent poll...

Categories