Build to Rent is now at the heart of UK housing policy and a new report suggests it could deliver 240,000 homes by 2030.
Recognising build to rent’s ability to increase the supply of homes will play an important role in the newly released Government Housing White Paper’s success, according to a new report from the British Property Federation (BPF) and real estate firm Savills.
It looks at the sector’s progress, potential and makes recommendations. Overall it says that on large urban sites, well connected to employment markets, Build to Rent can accelerate house building three fold.
The report, produced in conjunction with the London School of Economics, explains that if this can be achieved on, for example, just one fifth of the large sites that are currently being built out, that equates to additional delivery of 6%. Relative to the 164,000 new homes completed in England in 2015/2016, this is around an additional 10,000 homes per annum.
It explains that together with the level of supply expected to be completed over the next three years, this would equate to circa 15,000 build to rent homes per annum. This would result in a total of 240,000 homes being built by 2030 and provide a sector comparable in value to US Multi-Family REITs at around £60 billion.
Of particular importance to the sector, and its ability to accelerate housing delivery, is better recognition of it in the planning system, the report points out. The sector is therefore seeking a greater codification of the government’s preferred planning approach to the sector with a statutory planning definition of what build to rent is, an acceptance that discounted market rent may work better than other forms of affordable housing on such developments, and the use of covenants and clawbacks to give local authorities the assurances they need that such homes will remain in quality rental.
‘Build to Rent is a relatively new phenomenon in the UK, but already has a significant development pipeline, which will see it deliver thousands of homes over this Parliament,’ said Ian Fletcher, director of policy at the BPF.
‘By measuring build to rent’s growth and the other benefits it delivers, and what gets in its way, we want to show to government the sector can be an important partner to its ambitions to build more homes, on this most important of days for housing policy,’ he added.
According to Jacqui Daly, director of Savills residential investment research and strategy, pointed out that historically the rate at which new homes are built is closely linked to rates of sale but Build to Rent is a model that breaks this link.
‘There is no doubt that we need to boost house building significantly to address years of undersupply and begin to impact housing affordability. Build to Rent holds the key to getting institutions back into the housing market and increasing the supply of good quality, well managed homes,’ she said.
‘We hope that this report will give local authorities a deeper understanding of the benefits of Build to Rent and the tools they need to have a meaningful dialogue with developers and housebuilders and thereby secure long term institutional funding,’ she added.
