Build To Rent could plug the gap as landlords exit

Investment in the Build To Rent sector has almost doubled year-on-year, according to new research.

Property consultancy Cushman & Wakefield says that in the third quarter of this year some £1.17 billion was invested in BTR, up from the £600m recorded during the same period last year.

The consultancy attributes the surge to the size of the specific deals in recent months, which were much larger than last year.

It says that despite economic headwinds, investors remained attracted to the long-term opportunities the rental market presents, with an acute shortage of supply and a growing pool of tenant demand.

The largest forward funding deal in Q3 2022 saw Watkins Jones agree a £200m deal in Cardiff, delivering 715 BTR apartments at the former brewery site in Centre Quay. Watkin Jones agreed another forward funding deal at its Lower Bristol Road site in Bath for £100m - this scheme will deliver 316 units and is due for completion in 2025.

“Build To Rent has attracted a lot of investment so far in 2022, from existing and new institutional investors. It is inevitable that the wider economic uncertainty, as well as construction costs and debt will impact investment volumes over the coming months. Still, with a chronic shortage of homes to rent in the UK and a growing number of renters, the market offers buckets of long-term potential and has a track-record of performing well in economic downturns” says Millie Todd, head of residential research at Cushman & Wakefield.

However, despite the surge in investment and the BTR market growing 13 per cent in the last year, there are still only 74,000 professionally managed complete units in the UK.

Cushman & Wakefield says the withdrawal of many buy to lets as landlords flee the market gives BTR an opportunity to expand further and faster. .

“Rising living costs is putting huge financial strain on some UK renters, compounded by the longstanding imbalance between supply and demand which continues to drive rental growth. BTR is poised to plug some of the rental supply gap, which has been worsened by private landlords exiting the market. We are seeing the sector move towards delivering more affordable schemes that cater to a wider demographic with the appeal of being professionally managed, energy efficient and well-located rental homes” says Todd.