In recent years, approaches toward renting have changed, with many people stating they enjoy the versatility, freedom, and more excellent choice of living locations that renting provides. With more people working from home than ever before, access to home working amenities (such as work space) and green spaces has boosted demand. In contrast, the need for proximity to city centres and commuter transport has been reduced. Changing jobs every few years is also deemed normal, meaning that fewer workers want the location bonds that come with owning a property.
Young people are looking for community and facility, with BTR offering more significant opportunities for both thanks to proximity to peers and access to exciting facilities in BTR developments.
According to an analysis done by Savills—UK Build to Rent Market Update – Q1 2021, it can be seen that BTR households tend to be aged between 26 and 40, and the majority are single residents. Core and Secondary cities draw slightly younger tenants, with more than half aged under 30. London has a more significant proportion of renters aged between 30 and 40 as affordability limits ownership options within the capital. Sharing is more common in Core Cities and London, indicating unit layout and amenity provision. Extra workspace may need to be viewed to attract young, professional sharers. The analysis also found that families make up a tiny proportion of demand for Build to Rent in urban locations.
The dominant demographic across locations outside of London is “Central Pulse” households. These renters value convenience and favour apartments in vibrant areas that place them close to both their jobs and nightlife. A central location is therefore crucial in attracting the core demographic for regional BTR.
In London, tenants are highly educated (over two-thirds to degree level or higher) with high average incomes. London BTR tenants tend to be young, successful professionals living without children.
The UK’s BTR stock now includes 57,700 completed homes, with a further 36,000 homes under construction. The future pipeline currently stands at 94,700 homes, including those in the pre-application stage. This brings the total size of the sector to 188,500 homes once built.
Over the past year, the number of homes with consent has risen 27% to 45,000 homes. During Q1 2021 alone, 25 schemes gained full planning permission with a capacity for 7,000 homes. This is the highest number of full licenses achieved in a single quarter2.
Meanwhile, developers have continued to complete homes on-site, and the 10,600 homes completed over the past 12 months are in line with the three-year average (2018-20). New starts are not presently keeping pace with completions, resulting in a slight contraction of the construction pipeline. Construction starts trailing completions is a trend currently seen across residential development and is not specific to BTR. We expect that once the economic picture improves, starts will pick up again, and the construction pipeline will return to growth, particularly given the weight of permitted homes ready to start.