In recent years, the Build-to-Rent (BTR) market in the UK has been growing rapidly, attracting worldwide attention from investors and developers.
This growth can be linked to the current shortage in the UK’s housing market and increased demand for rental properties.
In this post, we’ll explore the BTR market in the UK, its current status, and why it’s a promising investment opportunity for the state.
Build-to-Rent is the construction of new residential properties specifically for renting.
Whereas individual landlords often own traditional rental properties, BTR properties are owned and managed by institutional investors or registered property companies.
This new model offers tenants several benefits, including higher living standards, more secure tenancies, and a dedicated management team.
Here’s a table showing the difference between BTR properties and traditional rental properties:
|Feature||Build-to-Rent (BTR)||Traditional Rental Properties|
|Purpose||Developed and managed by a single entity||Owned by individual landlords|
|Tenant Experience||High-quality amenities and a sense of community||Varies|
|Leasing Process||Managed by BTR company||Managed by a real estate agent or property manager|
|Maintenance & Repairs||Handled by BTR company||Responsibility of landlord or property management|
|Flexibility||Limited, but consistent experience||More flexible, but variable experience|
|Cost||More expensive||Varies depending on the location, property type, and landlord|
The BTR market in the UK has grown significantly, with new developments coming up in major cities and suburbs alike.
Since 2019, the market has developed from £35 billion to £56 billion—a stunning 60% rise. These figures are also expected to rise by about 82% to £102 billion by 2028.
Such exponential growth can be linked to several factors, such as the current shortage in supply in the UK’s housing market and the rising demand for rental properties.
The UK has been facing a housing crisis for many years, with a shortage of homes available for sale and rent.
Consequently, this has increased property prices, making it difficult for people to afford a home.
Recent economic struggles are destined to create a housing market crash, resulting in depreciating home investments and negative equity for some.
As such, the growing demand for rental properties and supply shortage have created an investment opportunity for BTR developments.
BTR properties offer several benefits, like steady rental income, long-term capital growth, and a decreased vacancy rate.
Unlike traditional rentals, these BTR properties are controlled by professional management teams, reducing the risk of tenant default and ensuring higher living standards for tenants. These properties also provide investors with a stable income higher than traditional rental income.
In addition, BTR properties are often located in desirable areas surrounded by most of the basic amenities, making them popular among tenants.
The Build-to-Rent market in the UK is a promising investment opportunity, offering a range of benefits, from a stable rental income to higher living standards for tenants. The developments are set to play a crucial role in the UK’s housing market for generations.
So, whether you’re an individual or an institutional investor, this opportunity can benefit your financial goals.