UK build-to-rent investment to hit £50bn by 2020?

UK build-to-rent investment to hit £50bn by 2020?

Over half of 20 to 39-year-olds in Britain are expected to be renting in the next 10 years, so is the time to invest in build-to-rent now?

Summary:

  • £50 billion worth of investment over the next four years will see the build-to-rent sector account for 5% of the rental sector by 2020
  • UK-wide property shortages and changing generational attitudes towards home ownership means that an additional 1.8 million households will become private renters within a decade
  • With increased rates of stamp duty for buy-to-let investors, should the focus now be on the build-to-rent sector?

Is the UK’s rental market on the verge of an investment revolution?

As Britain’s appetite for rented accommodation shows few signs of relenting, £50 billion is expected to be invested in the build-to-rent sector by 2020, the latest research from Knight Frank shows.

Build-to-rent (properties built specifically for rented living) accounts for 2% of the overall private rented sector in the UK. But this investment would see it increase its share to 5% at a time when the undersupply of rental stock has never been more pronounced.

250,000 new homes are needed each year to meet demand from a generation that no longer equates success with homeownership. Over 50% of 20 to 39-year-olds in the UK will be renting by 2025, meaning that the time for investment is now.

“There is a generational shift in the market both amongst renters and investors which stands a good chance of both stabilising the volatility of the housing market and satisfying some of the structural shortfall in supply,” said Tim Hyatt, Head of Lettings at Knight Frank.

Chancellor George Osborne has used his last few budget speeches to curb buy-to-let lending. Not only could this help free up more stock for those Britons looking to get onto the property ladder, it should also increase the emphasis on build-to-rent. This sector improves the rental experience for tenants, and also creates a huge opportunity for UK property investors.

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