A respected letting agency research head says Build To Rent could be a significant step towards solving the overall shortage of housing across the UK.
Dr John Boyle, director of research and strategy at the Scottish agency Rettie & Co, says this type of institutionally-funded and professionally-managed housing is common across Europe and the US where around 25m people live in the BTR sector.
Now he says, after years during which the sector appeared not to be taking off in the UK, the landscape is quite different with major BTR developments across England, most notably in London and Manchester.
Writing in The Scotsman he says the attractiveness of BTR for investors is easy to see – it reduces construction risk, greatly enhances the speed of delivery, is not tied to mortgage affordability, is more efficient from a management perspective, and can improve place-making.
“For tenants, BTR provides quality, purpose built housing and a greater level of amenity. To investors, the main Scottish cities are attractive in a BTR context, with higher yields, lower capital requirements and potential for market growth that outstrips many other UK cities. Demographic growth is also fuelling demand, while housing supply remains very weak” he adds.
Boyle’s article welcomes Scotland’s first operational BTR scheme - the 292-unit Forbes Place, just outside Aberdeen - and says there are over 2,500 units now planned in Edinburgh and Glasgow.
He says Scotland also has a number of mid-market rent schemes - “essentially affordable BTR” - including one in Edinburgh, where 96 units generated over 3,400 applicants
Boyle believes political instability north of the border, especially over possible independence, has delayed some investment because of nervousness over the future. “This is not for reasons of political partisanship, but simply because of the investor dislike of uncertainty” he says, adding that these concerns have eased in recent weeks.
But he warns: “The Scottish Government has been trying to woo the BTR sector, with measures such as a rental income guarantee scheme under consideration. However, it does appear that with the prospect of rent controls and other tenancy reforms, the government is using the brake and accelerator at the same time and, in so doing, is stalling the sector.”