Latest analysis from the British Property Federation (BPF) shows that the total number of build-to-rent (BTR) homes in planning, under construction or completed continues to increase year-on-year, but the pace of growth has slowed.
The analysis, carried out by Savills, shows 9% growth in the first quarter of 2023, compared to a long-term average of 28% annual growth.
Over the past year the BTR market outside of London has grown at twice the pace of the capital – 12% across the regions compared 6% in London.
A total of 186 UK local authorities (49%) have BTR in their planning pipeline. The regional planning pipeline is much stronger than London’s, increasing 4% quarter-on-quarter and 11% year-on-year to 78,175 homes.
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Recently introduced rent controls in Scotland have dampened investor confidence in the market there, which the BPF says could result in fewer homes proceeding from planning to construction in the coming months. Broader challenges with the UK planning system, including changes to government policy and resourcing at local authority level can make securing permission protracted and coupled with build cost inflation, rising interest rates, and labour shortages, could also contribute to an under delivery of new homes, the BPF said.
BPF director of policy Ian Fletcher said: “Build-to-rent is a critical part of meeting housing need in the UK and it is positive to see that the sector is continuing to grow in the face of several macroeconomic and sector-wide challenges. The planning pipeline continues to be robust, but there is an urgent need to deliver more of those homes, to alleviate pressures on renters. Regional growth in BTR is promising as the sector continues to expand beyond the traditional urban locations to secondary cities and towns.”
Savills associate Guy Whittaker added: “After four consecutive years of record-breaking investment, it’s no surprise that the latest quarter’s data shows the number of homes under construction still at an all-time high, at just shy of 49,500 homes. This growth looks set to continue: our recent survey of the European investment community found that by 2025, half of all investors – up from 37% today – expect over 25% of their assets under management to be allocated to the ‘living’ sector.
“The geographical reach of build-to-rent has also continued to grow: a quarter of local authorities currently have homes under construction, compared to 10% in 2017. This has been supported by the emergence of single family rental, which enjoyed a record quarter in Q1 2023, with nearly £500m invested.”
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