Will Montague, CEO of Leaf Living, writes about the important role that single-family rental housing could play in addressing the housing crisis and the opportunity the sector presents for housebuilders.
The UK is in desperate need of two things to help alleviate the housing crisis – more rental stock to provide a wider variety of tenures for residents and a better, high-quality, professionally-managed rental sector.
A recent report from Hamptons highlighted that there are now 42% fewer rental homes available compared to 2016, leaving tenants with fewer choices. I’ve seen firsthand how the traditional private rental market often lacks the long-term stability and high-quality service that tenants need, especially families. The future of the rental sector will hinge on offering sustainable, long-term solutions that cater to modern needs, and newly-built homes in strategic locations are absolutely fundamental to achieving this.
It’s positive to see that the build-to-rent sector continues to grow at pace, with new high-quality developments encouraging tenants to expect more from their landlords and the properties they occupy. The focus here is usually on town or city-centre developments for young professionals who benefit from value-add amenities such as a gym, cinema room and discount vouchers for local shops.
However, according to Knight Frank, half of all privately rented households in the UK (2.65 million) live in suburban – not urban – areas. Families with children are looking for safe, quieter neighbourhoods, more living space and private gardens, they want easy access to good schools, local amenities and nearby green spaces.
Remarkably, the single-family rental housing sector currently caters to just 0.4% of that number. This presents a huge opportunity for housebuilders looking to diversify their income streams in an area where there is a strong and immediate demand.
Residential developers have a significant part to play in the delivery of single-family homes and we’re already seeing a shift in attitudes. Larger housebuilders are looking for alternative ways to unlock their development sites to create more housing options in a prolonged, subdued market and as a result, are becoming more familiar with and open to single-family housing partnerships.
Families tend to stay in their rented homes for longer than young professionals, which means the income stream is often more resilient and offers a higher flow-through. Our development partners benefit from our forward-funding model, which brings certainty and security of investment – especially important in a challenging economic environment.
Leaf Living is now the largest owner of single-family homes in the south, and – based on contracted value – across the UK overall. Yields tend to be highest outside of the South East, which is why single-family housing stock has traditionally been focused in the North and the Midlands. Instead, we’ve focused our attention on delivery in locations where the need is greatest; especially in the South East where affordability for normal families is tight, driven by high house prices and a dearth of traditional rental options.
Our approach is entirely customer-centric and our offer relies on new stock. We market and manage high-quality, newly-built homes that meet modern standards in terms of design, energy efficiency, and comfort. All our properties have at least a ‘B’ EPC rating, which helps residents save on utility bills and reduces their carbon footprint.
We offer a range of options in tenancy terms, allowing residents to stay as long as suits them without the fear of the landlord selling the property. Our homes are pet-friendly, and we allow residents to decorate with prior approval. Our homes are designed for modern living, with smart features like keyless entry, video doorbells, and smart thermostats, making daily life more convenient and efficient.
Ultimately, the growth of the sector will not only be driven by affordability and access constraints. We see an opportunity to change perceptions around renting in the UK by delivering homes that are of high quality, secure and customer-centric, making them places families can thrive in for the long term. We believe that housebuilders have an integral part to play in this delivery.
