Buy To Let and Build To Rent win big investment despite pandemic

Some £3.5 billion of investment was placed in the growing Build To Rent sector in 2020, despite concerns over the pandemic and future patterns of renting. 

By the end of the year the total BTR pipeline stood at 126,085 units, a 17 per cent increase on late 2019.

The figures come from property consultancy Colliers, which says that overall UK residential investment volumes Iin BTR and other property investment) in 2020 hit £6.1 billion, matching 2018’s all-time high.

Around 40 per cent of that overall investment was targeted at London developments.

Andrew White, head of residential at Colliers, says: “UK residential property is a solid investment option in the UK, particularly in the burgeoning Build To Rent sector as there is a perfect storm of a shortage of housing, and a huge affordability gap, especially for those who want to work and live in London. 

“Over the last year the sector has grown 20 per cent and is going to continue to grow to meet the country’s housing needs.

“In addition to BTR our cities, and in particular London, will always be attractive to overseas investors. Despite Brexit the UK is still a gateway location to Europe and America, providing access to a secure financial market and another currency to capitalise on.”

Colliers says that as well as investment properties, consumer residential sales performed well last year. 

Although the first UK lockdown prevented physical property viewings from taking place, the Chancellor’s announcement of a stamp duty holiday last summer helped to capitalise on the pent-up demand which appeared once restrictions were lifted. 

In Q4 2020 transaction figures reached 351,000, the second highest quarterly figure since the global financial crisis; also during Q4 2020 there were 307,000 mortgage approvals, with an average mortgage size of £211,119.

Oliver Kolodseike, deputy chief economist at Colliers says: “It’s no surprise that the stamp duty holiday has resulted in a rush in home buying as the upfront costs become more obtainable. With affordability ratios continuing to deteriorate as house price growth outperforms earnings growth, house buying is as difficult as ever, particularly in the south east, and any support brought in by the government is welcomed. 

“The extension of the stamp duty holiday, albeit with staggered increases, until October is likely to mean that this level of activity will be sustained through most of 2021.

“It is also helping the buy to let landlords to grow their portfolios again. The last time residential activity reached those kind of levels was before the additional three per cent levy for second homes was introduced in April 2016.”