Original article written by The Financial Times.
Spotting a chance to generate income, institutional investors such as pension funds have taken to developing blocks of professionally run rental homes across the UK to compete with the part-time landlords who have traditionally dominated the country's £1 trillion rental sector.
While politicians have broadly welcomed the prospect of greater institutional ownership in the private rental market, other people have raised concerns that developers are turning out premium apartments for affluent millennials, rather than family homes.
Caroline Simmons, a strategist at UBS Wealth Management, says that many of these build-to-rent developments were on the outskirts of London as investors sought to maximise returns.
"Claims that [build-to-rent] can solve the housing crisis are overblown," says Ms Simmons. "The majority of these developments are high-quality, well-serviced blacks with the potential to generate healthy rents," she says, adding that such blocks would attract "higher-earning renters" rather than those people in need of "affordable living solutions".
According to the estate agent Savills, rental prices in build-to-rent blocks are typically above those of the broader residential market, often reflecting the higher quality of properties, which can include gyms, cinema-like screen rooms and running tracks.
The Resolution Foundation, a UK think-tank, has pointed out that many of the developments currently under way are high specification, and aimed at younger people rather than families with children. At an M&G Investments development in North Acton, London, nearly half of the residents are under the age of 25, while another third are aged between 26 and 35.
The Canadian private equity manager Brookfield and the UK property developer Canary Wharf Group, meanwhile, plan a development aimed at young professionals at Canary Wharf.
Ian Fletcher, a director of policy at the British Property Federation, says that any bias towards providing for younger renters was partly because the sector - which has taken off in the past three years - had grown fastest in London.
"A lot of the early stock coming forward was for young people," says Mr Fletcher. "But as build-to-rent has pushed out into the regions, we've seen a greater mixture."
The sector helped add 96,000 homes to the pipeline of UK new housing stock over the first three quarters of 2017, according to figures from the federation, if planning consents and part-built units are included alongside full completions. Further growth is forecast as investors warm to the income generating potential of the UK's expanding pool of renters.
The UK asset managers Legal & General Investment Management, M&G Investments and Oxford Properties - the property arm of a $72 billion Canadian pension fund, the Ontario Municipal Employees Retirement System - are among the investors piling into the asset class. Data about the build-to-rent sector are hard to come by, but there are signs that some investors are beginning to look to provide family homes, as well as upmarket apartments.
Grainger, the UK's largest built-to-rent landlord, has said that in a new development outside of Portsmouth, more than a quarter of the homes offered will be family homes with two to four bedrooms.
In Canning Town, east London, the group has built Argo Apartments, offering a mix of one- and two-bed flats and large amounts of shared space, including a roof terrace, gym, work zones and a dining room.
The UK government has spotted the potential, backing the build-to-rent sector by buying 10% of shares in a listed fund - PRS Reit - investing in the private rental sector.
Graham Barnet, chief executive officer of PRS Reit, says the fund was "focused on housing". "We don't think families should be living in apartments," he adds.
The group builds two- and three-bedroom houses, with about 2,000 homes constructed so far across cities such as Manchester, Leeds, Birmingham, Nottingham, Coventry and many places in between.
"Building family houses in the regions is an absolute bullseye politically," says Mr Barnet - while adding that he is still focused on returning a 6% dividend to investors.
Despite enthusiasm of investors for the schemes, however, the sector remains only a fraction of the country's residential letting market.
There were only 17,000 fully completed build-to-rent homes across the UK by the third quarter of last year, according to the British Property Federation, with a further 24,000 under construction and 55,000 with planning permission.