BTR pipeline grows by 22% to meet demand

The number of Build-to-Rent (BTR) homes either in planning, under construction or completed in the UK is up by 15%.

The figures from the British Property Federation (BPF) cover the period between Q3 2021 and Q3 this year when numbers rose from 209,313 to 240,202.

The BPF says that the sector continues to expand across the UK, as regions see 22% year-on-year increase on number of BTR homes under construction – and the pipeline in the regions has risen by 8% quarter-on-quarter.

However, on an annual basis numbers have rocketed by 22% with 77,282 homes planned.

Signs of a slowdown

The analysis, conducted at the end of the third quarter in collaboration with real estate firm Savills, shows that while the sector continues to grow, there are signs of a slowdown – at least in the short-term.

Also, inflationary pressures and rising interest rates are creating a ‘challenging environment’ across the construction industry.

The pipeline of BTR homes, however, remains robust with 113,536 properties in planning, up 15% year-on-year pointing to the long-term prospects for the sector.

Recent analysis from Savills provides the first long-term projection for the BTR sector and anticipates that the number of completed BTR homes could reach 380,000 in the next decade.

‘Build-to-Rent market had grown rapidly’

Ian Fletcher, the BPF‘s director of policy, said: “The Build-to-Rent market had grown rapidly under an economic backdrop of low interest rates and low inflation over the last 10 years.

“Current market conditions are clearly very different, but crucially there continues to be demand for high quality professionally managed homes in London and across the regions.

“The diversification of product to single family residential and into secondary cities highlights how the sector has evolved to date and will continue to do so to cater to need.”

He added: “The pipeline of BTR homes would benefit from a more standardised planning approach.

“Very few local authorities have BTR policies in their local plan, and therefore the application process is often bespoke and takes a long-time.

“For a sector that is driven by income returns, a long time in planning can put paid to many a scheme.”

‘Real need for planning efficiencies and policy support’

Jacqui Daly, the director of residential investment research at Savills, said: “The BTR sector has grown strongly, with the pipeline now at over 240,000, but there’s a real need for planning efficiencies and policy support to help maintain the momentum, particularly in major cities where the private rentals market supply issues are most acute.

“BTR has helped to provide new homes in areas where rental demand is intense, but new supply is not keeping pace with demand, particularly given the reported loss of rental stock as buy to let landlords exit the sector.

“According to Rightmove, there were over a quarter (-26%) fewer homes available to rent in the past three months compared to the pre-pandemic average, a figure that rose to -30% in London.”

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