Homes Built For Renting Are On The Rise

In 2019, we saw huge increases in the number of homes built specifically for rental purposes. According to research by Savills for the British Property Federation (BPF), there are currently 150,000 homes in planning, being built, or that have been completed.

In major cities across the UK including Manchester, Birmingham, Liverpool, Leeds, Glasgow and Sheffield, there was a large jump of 51% of Built to Rent homes.

What are build to rent homes?

These homes are specifically designed to accommodate renting tenants. They are usually blocks of flats with on-site management and amenities like a gym and lounges to relax in.

These properties are more popular in North America, known as multifamilies, and have been around for years and years. However in the UK, it's quite new and increasing in popularity.

How many does the UK have?

Only around 2% of the private rental sector in the UK are build-to-rents, however it's the fastest growing so we can expect to see this number rise drastically.

Q4 in 2018 in London saw 17,000 build-to-let completions, and this increased 18% to 20,061 a year later.

Q4 in 2018 in the UK apart from London saw 13,312 completions, which increased 51% to 20,120 the following year.

Of the 150,000 build-to-lets in the UK, around 40,000 are completed, 35,000 are under construction and 75,000 are in planning.

Where are these new build-to-lets?

Manchester and Salford boast the most, with around 23,000 completed or in development. Birmingham has nearly doubled in number from under 5,000 to over 8,000.

Other cities which experienced a recent hefty increase in build-to-lets are Leeds, Glasgow, Liverpool and Sheffield.

What about 2020?

In Q4 of 2019, around £274 million was invested into the build-to-rent sector. This meant that the total investment in 2019 was £2.4 billion.

Currently for 2020, we are seeing around £1.5 billion worth of deals under offer, suggesting by the end of the year we will see an increase compared to 2019.

One of CBRE's directors called James Hinde said "Transactions for the second half of 2019 have been subdued compared to the last two quarters of 2018, most likely as a result of market uncertainty around the general election. This does not tell the full picture though and with the number of deals currently under offer standing at around £1.5 billion, this suggests a different, and much more positive story going into the beginning of 2020.

"Indeed, there are some very significant deals throughout the UK, but particularly in the regions, with due diligence well progressed, which suggests that 2020 could be a record year for investment."

CBRE predicts a 30% increase in 2020 for total residential investment, and expects demand to come from diverse investors from both the UK and overseas.

We've seen the UK property market slow in recent months thanks to the uncertainty around Brexit and the general election. It's expected that though this may pick up in 2020, it may still be slow. Therefore, we could find that property developers use build to rent as a popular disposal route.

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