There has been a massive surge in the volume of lettings properties under construction for the burgeoning Built To Rent sector.
Data from the British Property Federation, with the assistance of Savills, shows that the total number of BTR homes under construction across the UK has increased by nearly 40 per cent in the past year.
There are now 139,508 BTR homes complete, under construction and in planning across the UK – an increase of 22 per cent over the last year.
The number of homes completed and in planning have also increased by 29 and 10 per cent respectively.
For the first time, the total number of completed BTR homes across the UK regions has caught up with the total in London – with 14,615 completed homes in the regions and 14,801 in the capital.
Developments in the regions continue to be given the greenlight at a faster pace – with 24,010 homes under construction in the regions and 19,304 in London.
Included in the total figures for 'in planning' are some 22,642 homes that have been, at this stage, merely earmarked by local authorities and developers for delivery on various identified sites.
The surge follows other government housing policy changes such as the revised National Planning Policy Framework that now references Build To Rent and provides special guidance for local authorities when dealing with planning applications from the sector.
There has been a big rise, too, in the use of Permitted Development Rights for BTR in London, usually meaning the conversion of offices to residential rental units; 30 per cent of completed Build To Rent homes have been delivered through PDR.
The British Property Federation says that as BTR continues to grow, it has also been able to diversify its offer with 15 per cent of schemes in the pipeline including houses, rather than just typical high-rise apartments. In 2018, the Prime Minister Theresa May called for the entire private rental sector, including both Buy To Let and Build To Rent, to provide longer-term ‘family-friendly’ tenancies.
“With the revised National Planning Policy Framework asking local authorities to identify how many new rental homes their respective areas need, the future should remain bright for BTR. This has never before been enshrined in UK planning policy and will only add to the growing number of local authorities that are seeing the benefits of build-to-rent in adding much-needed housing supply across the UK” explains Ian Fletcher, director of real estate policy at the BPF.
“PDR was a policy designed in response to planning policy failure, where too many office buildings sat empty for far too long. Clearly for Build To Rent PDR has supported kick-starting the sector’s growth, but its use has decreased, and this trend is likely to continue.”
Jacqui Daly, director at Savills’ residential investment research and strategy, adds: “It’s no surprise that permitted development accounts for such a large share of completed schemes because it has provided an easy springboard for BTR. Ultimately, however, investors need scale – ideally schemes of 250-plus units – and that’s generally impossible to achieve by converting an existing building. Changes to planning will make it much easier to get bespoke developments off the ground, which will match investor demand for sizeable portfolios offering long-term stable income streams.”