Build-to-rent sector grows 11% despite headwinds

The Build-to-Rent (BTR) sector has grown 11% in a year despite a challenging economic environment, according to research by the British Property Federation. 

Research conducted in partnership with Savills showed the total number of BTR homes completed or in the pipeline across the UK rose to more than 263,000 in the third quarter. 

However sharp increases in build and financing costs have had a severe impact on larger, more capital-intensive schemes in London, with new starts in the capital totalling just 434 units in Q3. 

Ian Fletcher, policy director at the British Property Federation, said there was “huge demand for purpose-designed homes for rent” in UK cities, but that the sector was facing headwinds in delivery. 

“Uncertainty on inflation and where interest rates will peak is causing projects to stall, particularly in London where developments are typically higher-density and more complex,” he said.  

“However, there are nearly 60,000 homes with a detailed planning application in the sector suggesting market activity could pick up quickly when conditions are right, but policymakers must recognise more support may be required to sustain the growth of the sector in the short-term.” 

A separate report by Lichfields suggested inconsistent planning policy relating to BTR was holding back the sector in London. 

Of the 35 local planning authorities in London, 46% make no reference to BTR in their emerging or adopted Local Plans, according to the consultant. 

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It also found that almost half 41% of bespoke BTR schemes, secured via specific planning applications, were in just four boroughs: Brent, Newham, Ealing and Enfield. 

“Boroughs must adopt a more proactive approach and align their planning policies to genuinely harness the benefits of Build to Rent,” said Adam Donovan, planning director at Lichfields, who co-authored the report. 

“In failing to do so, the BTR sector in London is being detrimentally affected despite the high demand for secure, well managed rental properties.”