With uncertainty surrounding Brexit having been pushed back until later this year, the property industry is facing concerns over its development and investment sectors. However, there is one sector in the industry which has seen a boom in recent years despite other uncertainty in the UK market. Build-to-rent developments are not only providing a much-needed supply for the shortfall of rental property across UK cities, but is also creating a lucrative business for discerning property developers.
In 2018, those working in the property industry - specifically in the build-to-rent and buy-to-let sectors were charged by Prime Minister Theresa May to support the countries need for 'family friendly' tenancy options.
Ian Fletcher, director of the British Property Federation, commented: "With the revised National Planning Framework, asking local authorities to identify how many new rental homes their representative areas need, the future should remain bright for build-to-rent in adding a much-needed housing supply across the UK."
According to research by Savills, the number of build-to-rent developments across the UK had grown by almost 30% year-on-year by the end of July 2018, and there is even more in the pipeline, with the number of build-to-rent developments under construction rising by 39% since 2017. With these British Property Federation figures only continuing to rise, numbers at the end of January this year stated that there were 139,508 build-to-rent homes across the UK of which 29,416 are complete; 43,374 are under construction; and 66,718 are in planning.
According to Property Reporter, "build-to-rent investments will become the mainstream by 2025" and will be worth 180% of what the sector is worth now - which currently stands at £2.4 billion.
Outside of London, this year has been the first year that build-to-rent homes have come close to exceeding the number of developments in the capital, with 14,615 completed by the end of January 2019 across the regions, compared to 14,801 in London.
Outside the capital, it's the Greater Manchester area that is performing the best in the build-to-rent sector, with over 5,000 apartments currently under construction (Savills). The city region is currently providing the second biggest chain for build-to-rent accommodation in the country - and the biggest overall on a per-capita basis).
There are many benefits to developers keeping their properties build-to-rent rather than selling to investors or owner-occupiers - though there are a number of things to consider before jumping into this sector; not all areas are suited to build-to-rent, and not all build-to-rent properties will fit into a developer's portfolio. One of the major things to consider when deciding whether to develop sites as build-to-rent for sale is how you will manage your site. There's a lot of work involved in the management of a property, especially if you plan on keeping a whole block of apartments to yourself, so considering this workload or whether you trust handing over your site to a management company is a key consideration, and something which turns many developers down the buy-to-let or purchaser route.