Property developers are looking to profit from the growing number of private renters by investing further in purpose-built rental accommodation.
The Build to Rent model has given housebuilders a new way to make money from Generation Rent, which largely explains why the sector is forecast to become a key growth area in the housebuilding market.
Including residential conversions, there were around 258,000 new dwellings delivered across the UK in 2016/17, up by 13% on the previous year, according to the ‘Housebuilding Market Report – UK 2018-2022’, which has recently been published by AMA Research.
For 2017/18, it is estimated the rate of growth has been similar, with 280,000 new homes being added thanks in part to purpose-built private rented housing (Build to Rent).
As well as attracting some of the larger housing associations an increasing number of larger private housebuilding groups are also diversifying into Build to Rent, usually in partnership with private investors.
To achieve desired rates of return, the focus of their investment is on large-scale apartment developments - in key parts of London, the West Midlands and the North West – which offer economies of scale.
As with purpose-built student accommodation (PBSA), this is mainly being achieved through the increased specification of prefabricated building components and even full offsite building systems such as volumetric modular construction.
Separate research by the British Property Federation (BPF) earlier this year also found that there has been a significant increase in the number of Build to Rent homes complete, under construction and in planning across the UK.
In the UK there are now well in excess of 100,000 Build to Rent homes across all stages of the development lifecycle.
Ian Fletcher, director of real estate policy at the BPF, said: “The Build to Rent sector is evolving quickly, with significant delivery in the regions and more houses, rather than just apartments, coming forward.”