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05/08/2020

Massive rise recorded in build-to-rent developments

Words: Huw Morris
Housing / iStock-807295382

The number of build-to-rent homes under construction or planned across the UK has jumped by 22 per cent against the same period last year, according to the British Property Federation (BPF).

Research by Savills commissioned by the BPF reveals that between the second quarter of 2019 and the same period of 2020, the number of completed build-to-rent homes rose by 37 per cent. The number under construction fell by 5 per cent, but those in planning rose by 27 per cent.

Although the sector continued to accelerate new housing supply outside of London, with a rise of 52 per cent in the number of homes in planning in the past 12 months across the regions, future growth in the capital remains more subdued. It has risen by 4 per cent since the end of 2019’s second quarter.

While the sector is preparing for future growth, with a significant increase in the number of build-to-rent homes in planning compared with a year ago, starts and completions saw a steep decline from the first to second quarters of 2020. The BPF said this reflects the unique circumstances of the Covid-19 outbreak and was a break with a strong performance in 2019 and first quarter of 2020.

In the first three months of 2020, the sector delivered 4,297 starts and 3,417 completions, but the second quarter has seen a sharp decline for both with only 1,827 starts and 1,640 completions.

Local developers are responsible for building 28 per cent of the market, followed by UK housebuilders at 27 per cent, large UK developers at 17 per cent, contractors at 14 per cent, with registered providers at 9 per cent and big international developers at 3 per cent making up the rest.

“Investor confidence in build-to-rent housing continues, with a greater commitment from the sector today to delivering new, high-quality rental homes across the UK compared to a year ago,” said BPF real estate policy director Ian Fletcher.

“The sector will play a key role in supporting the government’s ambitious plans to ‘level up’ the country’s regions and in building a shared recovery where more people across the country, whether they choose or need to rent, will have more choice of rental properties available to them.

“The build-to-rent sector’s growth will also aid the prime minister’s ambitions to ‘build, build, build’, with valuable construction jobs being created in all parts of the UK, but this requires momentum behind converting planning applications to construction starts. 

“These decisions, however, will be on a knife-edge for the next year, as risks rise and productivity remains low as a result of Covid-19, and so the government must ensure it does not take this much-needed new investment for granted, and both our planning and tax systems give confidence to investors to make decisions today for the long-term health of the UK housing market.”

Image credit | iStock

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