The UK Build to Rent (BtR) market has demonstrated remarkable resilience amidst economic uncertainty, offering a promising landscape for savvy property professionals. With a record £820m transacted in Q1 2023, the UK BtR market is only c.£240m less than Germany, the largest investment market in Europe 1.
A Strong Start to 2023
Despite the lowest Q1 since 2018, the UK BtR market has shown a strong start to 2023, with 12 deals transacting, totalling over 3,500 homes 1. The total investment exceeded £1.1bn, demonstrating a robust investor appetite for opportunities across the sector 2.
The Rise of Single Family Housing
Single Family Housing (SFH) has enjoyed a record quarter, with nearly £500m invested. The scale of investment, alongside strong operational performance, is stabilising yield sentiment and supporting liquidity 1.
A Flourishing Construction Pipeline
The number of homes under construction has grown by nearly a third in the past 24 months, and construction now spans 25% of local authorities. BtR has become a key part of addressing housing need in the UK and is taking an increasing share of construction starts 1.
A Shift in Housing Requirements
The current BtR, co-living, and student housing market mainly targets the 18-35 age bracket, with a focus on flexibility, easy access to urban spots and social life, and professional maintenance. Rising costs and increasingly harder-to-get mortgages have caused renting to almost become a lifestyle choice for the younger generation 3.
The Future of BtR
Projections for 2023’s rented residential market in the UK underline that the rental growth will persist, reaching slightly under 50% of the spending of the pre-tax income of an average tenant 3.
In conclusion
The UK BtR market offers a promising landscape for property professionals. Despite economic uncertainties, the sector has shown resilience and growth, offering unique insights and opportunities for those looking to invest in the property market.
Resources
Savills UK Build to Rent Market Update – Q1 2023 ↩ ↩2 ↩3 ↩4
BTR News UK Build to Rent investment exceeds £1.1bn in Q1 2023 ↩