The UK is seeing an influx of American-style purpose-built professionally managed rental homes, 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 increased, 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.
Richard Jackson, co-founder and managing director of Apache Capital Partners, which has a £2bn BTR development pipeline with Moda Living, said: “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.”
There are now 152,071 BTR homes at various stages of completion in the UK.
Of these 40,181 are complete, with a further 35,415 under construction and 75,475 in planning.
This represents an increase of 15% over last year.
Manchester and Salford lead 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 homes, to over 8,000, with Leeds, Liverpool, Glasgow and Sheffield all seeing an uptick in BTR activity too.
Pete Ladhams, managing director of BTR specialists Assael Architecture, which has designed BTR projects for L&G, Grainger plc and Essential Living, added: “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 chief executive of deposit alternative provider flatfair, said: “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.”