The Growth of Build to Rent
The growth and expansion of new “Build to Rent” schemes across the UK is continuing at a rapid pace. Back in 2014, when the PRS Taskforce was approximately half way through its work for Government, the development of projects purely for rental was largely focused on London. East Village, Stratford (on former Olympic Village land) was already established and attracting residents who were keen to embrace all that living in this newly created rental community had to offer. Other new “Build for Rent” projects were largely confined to mid and outer London Zones
where the combination of higher yields and stronger rental growth prospects were prominent factors in their appeal to investors.
A significant amount of change has taken place over the past two years, however, with new “Build for Rent” projects now taking place all over the UK. According to the BPF (British Property Federation) there are now some 55,746 bespoke “Build for Rent” units either that have been constructed, are under construction or in the planning process across the UK. The split between London and the regions is now almost 50/50 with 28,663 of these in London and 27,083 elsewhere.
Although there are some PRS investors who will seek to remain purely in London with their rental offer, others in the PRS investor community inevitably started concentrating their focus on regional cities such as Manchester and Birmingham where similarities are likely exist in terms of rental population and socio-demographic profile. Manchester is undoubtedly now the UK’s second city in terms of it’s future provision of “Build for Rent” stock. The vibrant city centre, good mix of commercial and economic business factors, plus a dynamic younger population and post-graduate marketplace all make for an attractive “PRS friendly” culture.
The demand for and supply of PRS “Build to Rent” projects has now extended even further afield with sub-regional cities, larger towns and University centres now attracting further investment. Those locations which are well connected or are anticipated to have improved transport infrastructure or regeneration are also proving to be highly popular. This includes centres such as Bristol, Exeter, Reading, Edinburgh, Leeds and Aberdeen. There are many factors to be considered when identifying the suitability of a location as having potential for PRS “Build to Rent”. As the market and demand for high quality, professionally managed rental product grows, it is also likely to become more segmented, with greater emphasis being placed on creating specific product and rental management services to meet the needs of different consumers. Many PRS investor/operators are now engaged in highly creative ventures to establish their niche and brand offer, to entice customers. It remains to be seen who will gain the most success from this next stage in the growth and expansion of the UK’s rapidly evolving PRS market!
Non-Executive Director & PRS Specialist