Currently the UK has 32,200 built-to-rent (BTR) homes; this could rise to over 1.7 million at full maturity, Savills projects. This white paper explores the opportunities, the challenges and who is making the news headlines in this growing sector.
The big opportunity
There are currently 32,200 BTR homes in the UK, valued at £9.6bn – just under 1% of the total value of the privately rented sector (PRS).
Source: BPF/Savills Q2 2019.
At full maturity, the sector could comprise over 1.7 million households, with a total value of almost £550bn. Source: Savills.
“Looking to the student accommodation sector as our benchmark, there’s a long time to go before institutional private rent reaches maturity. This means there is still scope for seismic shifts in the sector… There is also plenty of opportunity for new and innovative entrants to disrupt the market, as customer awareness and understanding of this tenure increases”
Lawrence Bowles, Associate Director, Residential Research, Savills
What is the appeal of BTR for investors?
• Stable long-term returns. As Dan Batterton, BTR fund manager, Legal & General, told the Financial Times: “You can’t digitise a bed.” Residential is less susceptible to technological disruption than other real estate asset classes such as retail (online shopping) and offices (telecommuting).
• Huge undersupply of housing in the UK, and a strong demand for quality, rented property.
• Expanding market: accounts for less than one per cent of the value of PRS homes in the UK, compared with 47% in the US.
• There is potential for values to increase as information on costs and rent returns increases and investors gain confidence in the sector.
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- What is the appeal of BTR for investors?
- Investment flows into the UK
- BTR investment by type of investor
- Where is demand heading?
- Role of UK Government