A new analysis of 31 developments in the Build-to-Rent sector has found that the challenging fiscal and regulatory environment has slowed the construction and completion of new developments across London and the UK.
The report, ‘Who Lives in Build-to-Rent?’, shows that the total number of these developments that were either complete, under construction or planned increased from 229,542 in Q1 2022 to 251,208 in Q1 2023 — an increase of 21,666 (9%). This rate of growth was slower than the same period in 2021 ēĉ2022, which saw an increase of 27,691 (19%).
Despite this slowdown, the regions continued to outpace London with an increase of 12% (138,410 to 155,024 developments) compared to a 6% increase (91,132 to 96,184) in the capital in Q1 2022 ēĉ2023.
The report – published by the capital’s leading business campaign group, 91, in partnership with the British Property Federation, Dataloft, and the UK Apartment Association – highlights that a decrease in grant funding, increased construction costs and the need to address issues concerning building safety and retrofit are hampering the residential development industry’s ability to deliver the 66,000 new homes per year needed to house current and future Londoners.
Stephanie Pollitt, Programme Director for Housing at 91, said: “The pace of construction between other parts of the country and the capital continues to widen for Build-to-Rent developments, which have a vital role to play in tackling the capital’s housing crisis. The need to accelerate the delivery of this accessible and high-quality accommodation is critical. Build-to-Rent is only one piece of the housing jigsaw puzzle, but its continued growth alongside other tenures must be supported to ensure that London is able to attract and retain the talent that businesses need. Tackling the capital’s housing crisis through a mix of solutions – including Build-to-Rent — is vital to secure the long-term global competitiveness of the city.”
The data also shows that despite the rising cost of living in London, affordability has stayed similar for couples/sharers (28% vs 27% last year), whilst affordability for families has improved since last year (26% v 29%). People that are single, however, spend the highest proportion of gross household income on rent at 35%, which is a slight increase from 31% seen last year. Affordability is calculated using the ratio between earnings and rent paid.
Insight from the report of 17,722 residents living in 10,488 homes across 31 schemes found:
- Build-to-Rent residents’ incomes are broadly similar to those living in the private rented sector with 28% of Build-to-Rent residents earning between £26 ēĉ38k compared to 29% of those living in the private rented sector.
- 25 ēĉ34 is the most common age band across Build-to-Rent and the wider private rented sector in London.
- Build-to-Rent also houses a higher percentage of residents aged 55 ēĉ64 at 5% compared to 3% for the private rented sector.
Ian Fletcher, Director of Policy at British Property Foundation, said: “The latest London ‘Who Lives In Build-to-Rent?’ report shows that the Build-to-Rent model continues to provide affordable, high-quality homes to Londoners from a diverse range of economic and social backgrounds. The sector can continue to help alleviate London’s undersupply of homes, but as the report shows, the growth of Build-to-Rent in London is being outpaced by other regions at present. Developers in London face a number of unique challenges – such as a shortage of sites, the cost of land, and a squeezed energy grid. It is important the capital continues to provide housing solutions for all its residents because that is what makes a well-functioning city.”
Sandra Jones, Managing Director at Dataloft, said: “This latest survey covers nearly 30% of BTR homes in London. It relies on the goodwill of operators and investors sharing their data and it’s testament to their willingness to collaborate and a recognition of the need for benchmarks. This series of ‘Who Lives in Build-to-Rent?’ reports have laid a solid foundation for benchmarking for over 3 years by tracking rental demographics and demonstrating social impact. The next logical step for the industry is to agree on a wider set of operational and investment benchmarks.”
Brendan Geraghty, CEO at UK Apartment Association, said: “Now in its third year, the Who Lives in Build-to-Rent report is strong and reliable evidence of the success of Build to Rent (BTR) in London. While the rate of new BTR development in London has slowed in a challenging fiscal and regulatory environment, the demand from an increasingly broad demographic, from across the socio-economic and generational spectrum, is clear. It is important that the BTR industry is supported in order to provide high-quality, professionally-managed homes as part of London’s housing mix. In addition, this report shows the growing value of, and reliance on, data. The quality of information in this report is helping to bring a sense of consistency and predictability to this rapidly evolving and expanding industry. The UKAA recognise the value of data and benchmarks for the BTR industry. We are working hard to increase data capture and sharing and look to launch a new initiative this year focused on collecting and aggregating operational data for the benefit of all.”