Research shows there are now 167,853 build-to-rent homes complete, under construction or in planning across the UK, a 22% increase against the same period last year
The research published by the British Property Federation (BPF) found that between Q2 2019 and Q2 2020, the number of completed build-to-rent homes rose by 37%, the number under construction decreased by 5% and the number in planning jumped by 27%.
While the sector continues to accelerate new housing supply outside of London, with a rise of 52% in the number of homes in planning in the last 12 months across the regions, future growth in the capital remains more subdued.
The number of build-to-rent homes in planning in London increased by 4% since the end of Q2 2019.
To ensure transparency on the sector and its growth, the research has been produced by Savills, commissioned by the BPF, and draws on Molior data in London. It is published quarterly as an interactive map on the BPF’s website.
The sector is preparing for future growth. The research shows a significant increase in the number of build-to-rent homes in planning compared to a year ago.
The impacts of Covid-19 on the sector
The Covid-19 pandemic has halted what had been a strong 2019 and Q1 2020, shown by the steep decline in number of starts and completions from Q1 to Q2 2020.
In Q1 2020, the sector undertook 4,297 starts and 3,417 completions, but Q2 has seen a sharp decline for both with only 1,827 starts and 1,640 completions.
While professional investment firms typically finance build to rent and manage the development for the long-term, the research today also shows the breakdown of types of organisation building the new homes.
Local developers are currently responsible for building 28% of the market. The rest is comprised of UK housebuilders (27%), major UK developers (17%), contractors (14%), registered providers (9%) and major international developers (3%).
Ian Fletcher, director of real estate policy at BPF, said: “Our research shows 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.
“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 its 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.”
Jacqui Daly, director at Savills residential research, added: “It will be a while before we fully understand the impact of lockdown on the sector, but it is clear that existing affordability issues, stricter lending criteria and the end of the furlough scheme will force aspiring first time buyers to delay buying until the wider economy recovers and underpin demand for secure, well-managed private rented accommodation.”