Number of build-to-rent homes under construction soars 40%

January 17, 2019 / Isla MacFarlane
Number of build-to-rent homes under construction soars 40%

Research published today by the British Property Federation (BPF) shows that the total number of build-to-rent homes under construction across the UK has increased by nearly 40%.

The findings follow a significant year of new housing policy from the government, including a revised National Planning Policy Framework that now references build-to-rent specifically, to provide guidance for local authorities when dealing with planning applications from the sector.

There are now 139,508 build-to-rent homes complete, under construction and in planning across the UK – an increase of 22% over the last year. The number of homes completed and in planning have also increased by 29% and 10% respectively.

For the first time, the total number of completed build-to-rent 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’, the research has tracked the capacity of strategic sites across the country identified for build-to-rent. A total of 22,642 homes have been earmarked by local authorities and developers for delivery on these sites

Looking specifically at the use of Permitted Development Rights (PDR) across London, 30% of completed build-to-rent homes have been delivered through PDR, yet PDR makes up less of the future pipeline in London with only 9% currently under construction and in planning using PDR.

With only 74 build-to-rent developments having used PDR in London, and a total of around 5000 office-to-resi schemes across the country, the build-to-rent sector’s use of PDR has always remained a small percentage.

As build-to-rent 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 the buy-to-let and build-to-rent sectors, to provide longer-term ‘family-friendly’ tenancies. The build-to-rent sector has committed to offering this, a promise to ensure more stability and predictability when renting.

Ian Fletcher, Director of Real Estate Policy, British Property Federation said, “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 build-to-rent. 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.

“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-the-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, Savills residential investment research and strategy, added, “It’s no surprise that permitted development accounts for such a large share of completed schemes because it has provided an easy springboard for build to rent.

“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.”

Did you like this? Share it: