Build to Rent: Aligning the stars

The private rental sector has always been with us, for the most part living in the shadow of our cultural obsession with home ownership. Two catalysts in the last quarter century have shifted the market’s centre of gravity. First was the fundamental ‘pull’ factor: the Housing Act of 1988 deregulated rent controls delivering investment and income growth potential for landlords and therefore wider choice for tenants. Second was the shock ‘push’ factor: the financial crisis of 2007/08 put the brakes on first-time mortgage lending and thus helped to create today’s ‘Generation Rent’. Add in the growth of buy-to-let and sharp house price increases relative to earnings and the shape of the UK’s 10-million tenant strong rental market has significantly changed.

One result is Build to Rent (B2R) - a residential asset class and distinct property sector that offers huge opportunities to developers and investors interested in the medium and long term return. Well established in the US and Europe, B2R as a proven concept is decades old and an accepted ‘tenure-for-life’ choice that carries none of the latent social stigma still sometimes felt in the UK.

The plain fact is that UK population growth is outstripping our ability to build, with increasing demand creating an inevitable housing shortage. B2R enables developers and investors to address this shortage in volume and capitalise on the opportunity with an attractive lifestyle choice for the rental generation. A lifestyle built around a community of people with shared amenities that provides a fluid mix of residents with freedom and flexibility. In purely commercial terms it’s a single product, supported by a range of excitingly tailored value added services and consumed by likeminded customers.

In this Briefing Paper, we take a look at how we believe B2R can thrive in the UK as an institutional and corporate grade investment that delivers a very British twist on the American and European experience.

Click here to read the FirstPort briefing report.

April 2017