Build to rent gains momentum

16 January 2018
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The rapid expansion of the UK’s ‘build to rent’ sector will gather yet more momentum in 2018, according to a new report. A British Property Foundation survey found that there are around 79,000 build to rent units in the current development pipeline, an increase of 40 per cent compared with mid-2017.

A third of these (24,000) are already under construction, and a growing range of institutions are investing in the area, providing further impetus.

Changes to mortgage regulation and tax relief conditions have dampened the enthusiasm of British buy-to-let investors, opening new opportunities for build to rent investors. And an undersupplied rental market, particularly in London, has maintained sufficient demand for continued growth. The number of buy-to-let mortgages granted for the year to August 2017 was 75,300, a fall of 47 per cent compared to the year to March 2016.

The UK’s planning system is currently under active review, with more opportunities for development likely, as the government seeks to increase land allocation in areas where affordability is stretched. This may also support build to rent developers.

Overall, property experts argue that 2018 will be a year of demand for prime assets and secure income streams, as capital growth will be limited and the cost of borrowing may rise. ‘Demand for private rented properties will continue to increase,’ the report concludes.