Housing is a very real problem
Now Britain has a new government, many people are wondering how it intends to address the severe housing crisis. Reasons for the shortage vary from an ageing population and increasing build costs to a rise in the number of one-person households. However, despite the assurances of previous governments, housing continues to be a very real problem across the country.
Because there is higher demand for affordable housing and a scarcity of homes to meet that need, the private rental sector (PRS) is taking the slack. Here we take a look at how the Build to Rent sector can step up supply to ease the crisis.
Millennials Are Leaving London Due To Escalating Rent Costs
Recent research by estate agent Knight Frank revealed that the UK’s private rental sector (PRS) is expected to increase to £75 billion by 2025, with an additional 560,000 households anticipated to be in private rented accommodation by 2023.
While general demand has increased, it is led by millennials and those aged between 35 and 45. With the average rental price for a two-bed flat in London now standing at around £1,450 a month, more people are looking to the regions. As a result, the rest of the country is seeing a rise in young professionals seeking to improve their standard of living by relocating to cutting edge cities like Birmingham and Manchester.
Is the BTR sector the solution we’ve been waiting for?
Thankfully the rapidly growing Build-to-Rent (BTR) sector is putting itself front and centre to meet the challenge. BTR homes are designed and built specifically for renting. Given the diverse needs of renters, a “one-size-fits-all” approach simply won’t work. Consequently, properties are developed to the highest quality and standards so as to avoid unsatisfied tenants and unoccupied homes.
Choice, longer tenancies, good local amenities, and transport links are just some of the reasons that renters are choosing BTR properties over those of traditional landlords. Equally important for them are trust and service.
There were at least 101,614 complaints made against private landlords in England and Wales in 2017/18 – resulting in just 996 prosecutions. Renters are rightly concerned about irresponsible landlords, more focused on short-term profits at the expense of health and safety and long-term relationship building.
With BTR, developers are building reputable brands based on service and trust. Projects are built at scale, so standards are consistent, and are overseen by accountable, professional managers, drawn not just from the world of housing, but also from hospitality, in recognition that it is a service industry.
Growth in BTR Sector to Continue in 2020
Consistent growth in BTR is a testament to the success of developers understanding the concerns of renters, addressing them through the provision of quality accommodation, and continuing to maintain a meaningful dialogue with tenants when they’ve moved in.
New data released by the National House Building Concil (NHBC) highlights a significant jump in the volume of new build-to-rent units that were built last year. Just under 4,800 new build-to-rent units were completed in 2019 – a huge leap of 57% compared to 2018. The figures prove the fast pace with which the BTR sector and affordable housing schemes are progressing.
A recent report from Savills, which looked at data from Molior, highlighted a number of key areas in the UK where build-to-rent has seen the most growth. While London is home to the largest concentration of this build type, it is the regions which have seen the biggest increase in the past 12 months. Manchester, Birmingham, Liverpool, Leeds, Glasgow and Sheffield were all flagged up in the report as the areas with the biggest rise in build-to-rent construction over the past year.
These cities are also some of the top places for property investment in the current market, as both tenants and investors increasingly look away from London for better options. With greater affordability, higher rental yields and major regeneration underway in these areas, they are expected to have the best performing housing markets over the coming years.
The meteoric rise of build-to-rent in the UK last year shows the appetite for genuine alternatives within the rental market. As residential housing shifts towards being more service-led, rental properties are offering residents far more than just a home. With a range of amenities, building-wide social initiatives and boasting great locations, BTR is showcasing what a more professional, secure and high-quality rental product looks like.