Offsite and modular construction will support the rise of Build to Rent, says Nick Cowley, managing director of Euramax
The latest figures from the British Property Federation reveal that there are now 157,512 build to rent (BTR) homes complete, under construction or in planning across the UK – a 12% increase against the same period in 2019.
As renters move away from city centres, the explosive growth of BTR builds will inevitably increase expectations for more efficient, smarter and higher quality builds.
The term alternative asset class describes less traditional investment options. When referring to residential property, this term typically encompasses BTR homes, senior living accommodation and student residences. All of these residential buildings share a common ambition – to house as many tenants as possible.
In the UK, BTR has been primarily associated with large residential complexes in major city centres, with amenities such as roof gardens, 24-hour concierge, gyms and communal social spaces – all delivering modern convenience to their inhabitants. However, interest from investors and developers in suburban BTR housing is also growing.
The rental boom
Build to Rent is a relatively new sector with enormous growth potential. Currently valued at £9.6bn, real estate agent Savills projects it will be worth almost £550bn at maturity, providing homes for over 1.7m households.
Homeownership rates are falling across most age groups. The Office for National Statistics recently reported that a third of those aged between 35 and 44 in England were living in the private rental sector in 2017, up from fewer than one in 10 in 1997. As the rate of would-be homeowners falls, building and owning rented accommodation is becoming increasingly worthwhile.
Housebuilders are taking note of this potential and many are taking on projects specifically destined for renting. For instance, Grainger, the UK’s biggest landlord, has a pipeline consisting of 24 schemes totalling over 9,000 homes built exclusively for rent.
BTR housing is often seen as appealing to millennials, who appear to be more flexible in their living and working arrangements and are opting not to settle in one place too early. However, as the sector grows, senior living is another major area of potential for BTR players.
While the over-65 age category is the only age range where homeownership rates are not reported to be falling, the older generation could also be driving up rent requirements. As people grow older and their lifestyles change, so do their accommodation needs. Properties in less urban locations become more desirable and many older homeowners do not want to be tied down to the responsibility of a large home.
The bulk of the existing 730,000 retirement housing units across the UK is sheltered housing for social rent. Savills predicts that the retirement living sector could grow to 1.7m homes at full maturity, as more senior citizens turn to private renting.
Make it modular
Pipeline projects and exponential growth forecasts clearly demonstrate the potential of the BTR market. To tap into this, construction needs to happen with pace, while maintaining quality.
Fabricating BTR residential blocks and homes offsite, before constructing their pre-assembled modules at the final destination, could answer the needs of many BTR investors. To maximise revenue, most investors will want their buildings to be constructed quickly, to get renters through their doors as soon as possible.
Modular homes are much quicker to construct in comparison to traditional build homes, with some developers offering onsite completion in as little as two weeks. Onsite construction also offers greater control, meaning factors such as weather, daylight savings and road traffic do not impede productivity.
Completing entire modules in a controlled facility can also enable better collaboration. Suppliers can ship their building materials and products to the facility without concern that they’ll be misplaced or damaged on a busy building site.
Modular construction also delivers more energy efficient homes. Not only will this benefit BTR homes environmentally, but the controlled construction of modules also makes them more airtight, saving investors both energy and money. This is especially important for senior and student living complexes, where most residents rent on a bills-included basis.
Energy efficiency can be further enhanced by choosing the right construction partners. As well as making their own manufacturing processes as efficient as possible, refabrication facilities rely on their suppliers to deliver products that improve the quality of the finished build. With windows and doors being a main source of heat loss in a home, partnering with a supplier that can tailor its products to modular projects is key to delivering efficiency.
As the build to rent market continues to reach new heights, it’s clear that investors will need to find solutions to meet market demand, while meeting quality standards. If this building method is going to achieve the 1.7m homes forecast, investors must consider the benefits of building offsite and collaborating with other industry leaders to deliver success.
+44 (0)330 1340290