Agency makes lavish claim for future growth of Build To Rent

The advocates of Build To Rent have made another ambitious target for the sector’s growth. 

Research from the British Property Federation and Savills projects that the number of completed BTR homes could increase five-fold to reach 380,000 by 2032, with the sector worth £170 billion,.

The projection, undertaken in partnership with BTR pioneer Get Living, suggests that by 2032 some eight per cent of UK homes for rent will be purpose-built, up from 1.5 per cent today. The analysis predicts a continued evolution in the market, with single-family homes making up almost a fifth of BTR stock in a decade’s time compared to 12 per cent today.

The new analysis has been undertaken to coincide with the ten-year anniversary of the Montague Review, a report commissioned in 2012 by then Housing Minister Grant Shapps - now Home Secretary - to remove the barriers to long-term institutional investment into purpose-designed homes for rent. 

The review’s recommendations, which were adopted by the then-David Cameron led government, included more support for BTR in national planning policy and Local Plans, the release of more land for development and standardisation of tenants’ rights. 

The Montague Review is widely acknowledged to have marked the birth of the modern BTR sector. The Olympic Village in Stratford, which was designed as temporary accommodation for athletes competing at the 2012 London Olympic Games, became the UK’s pilot BTR scheme once converted into professionally managed rented accommodation. 

A decade later, as at Q3 2022, £30 billion has been invested into the BTR sector, delivering 76,800 completed homes and a further 163,400 in the planning and delivery pipeline. While the sector still represents a small proportion of new housing delivery, it is growing rapidly with the number of completed BTR homes increasing by 14 per cent year-on-year in Q3 2022

Following the review, developers and investors initially focused on London, but since 2017 there has been a shift towards other core UK cities led by Manchester, Birmingham and Leeds. 

Ian Fletcher, director of policy at the British Property Federation, says: “The Montague Review was a significant moment that gave birth to the Build-to-Rent sector as we know it today. Ten years on we can say the review achieved its core aim of unlocking long-term institutional investment into homes for rent, helping address the chronic shortage of quality housing in an and around town and city centres and serving as a catalyst for urban regeneration. 

“The current market conditions underline that we must continue to diversify housing supply in order to drive economic growth, and the government must continue to look at how planning reform, more support for local authorities and the release of land for development can enable the sector to continue its upward trajectory.”

And Jacqui Daly, director of residential research at Savills, adds: “When the Montague Review was undertaken in 2012 UK housing delivery was at its lowest level since the post-war period, and uncertainty in the lending markets post-GFC was suppressing delivery from traditional housebuilders. There are some parallels with where we are today, with Government suggesting it may abandon national housebuilding targets and rising interest rates set to cast a shadow over for sale market. 

“What is clear, is that the demand for high-quality, professionally managed homes for rent is only going to increase, not only for the core demographic of graduates and young professionals but for single families, couples and individuals at all life stages. This underpins our projection that we will see huge growth in the sector over the coming decade as institutional investors look at asset classes that can deliver sustainable returns.”