UK regions see 50 per cent increase in US-style rental homes in 2019
The UK is seeing an influx of American-style purpose-built, professionally managed rental homes, according to new research, with the number of homes designed and built specifically for rent having grown massively in the last year.
Analysis by Savills for industry trade body the British Property Federation (BPF) has found the number of ‘build-to-rent’ (BTR) homes has jumped hugely, with 150,000 BTR homes in planning, under construction or completed.
There has been a 51% surge in the number of completed US-style rental homes in key regional cities, with Manchester, Birmingham Liverpool, Leeds, Glasgow and Sheffield leading the way.
Typically BTR homes are apartment blocks that come with add-ons such as a hotel-style concierge and on-site management as well as shared amenity spaces such as a gym or residents' lounge.
This type of professionalised rented housing is well established in North America, where it is known as 'multifamily' and has been around for decades.
This increase meant that there are now more completed BTR homes across the UK’s regions than in London, although the capital still has more BTR homes under development.
There are now 152,071 BTR homes at various stages of completion in the UK. Of these, 40,181 of these are complete, with a further 35,415 under construction and 75,475 in planning This represents an increase of 15 per cent over last year.
The regional breakdown saw Manchester and Salford leading the way, with almost 23,000 BTR properties either completed or in the development pipeline. Birmingham meanwhile nearly doubled its pipeline from 4,800 BTR hones, to over 8,000, with Leeds, Liverpool, Glasgow and Sheffield all seeing a major uptick in BTR activity too.
The quarterly report is conducted by Savills on behalf of the British Property Federation, a trade body for the property industry.
Examples of recent BTR projects to launch include:
- Clippers Quay by Grainger plc in Salford, a 614-home scheme close to MediaCityUK, which is the largest open BTR development outside of London
- Angel Gardens by Moda Living and Apache Capital Partners in Manchester city centre next to the new Amazon HQ, which offers 466 BTR homes
- Allegro by LaSalle Investment Management, a 603-home scheme opposite where the HS2 terminal in Birmingham, which is the city’s largest BTR development by number of homes
- The Mercian by Moda Living and Apache Capital Partners, a 481-home scheme and is the city’s tallest residential tower under construction (42-storeys) funded by Goldman Sachs' first ever BTR development loan
- Brook Place by Grainger plc, a 273-home BTR development that is Sheffield’s first BTR scheme to open and welcomed its first residents
Richard Jackson, co-founder and managing director of Apache Capital Partners, which has a GBP2 billion BTR development pipeline with Moda Living, says: "Given the wider investment landscape and the state of the traditional private rented sector in the UK, it's no surprise that build-to-rent continues to attract interest from both investors and consumers. The under-performance of traditional investments such as sovereign bonds has encouraged institutional investors such as pension funds and insurers to look at emerging asset classes like BTR for long-term steady income streams to match their liabilities, while the poor quality of accommodation and service that many renters receive from private landlords mean a purpose-built, professionally managed offer like what we're providing through our partnership with Moda Living is highly appealing.
"We've seen healthy demand at our first building to open Angel Gardens, and we see regional BTR going from strength to strength, buoyed by strong fundamentals and a renewed political focus on powering up the UK regions."
Pete Ladhams, managing director of BTR specialists Assael Architecture, which has designed BTR projects for L&G, Grainger plc and Essential Living, says: "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.”
Franz Doerr, founder and CEO of deposit alternative provider flatfair, says: "These figures show the demand for professionally managed rental housing that makes the entire experience seamless. As people rent for longer periods there will be an increased focus on service, and Build to Rent housing is leading the way. As more units come online, service will be the differentiating factor between developments, and those that embrace the technological solutions that make things easier for tenants will thrive."