Figures compiled by the British Property Federation show that the private rented sector (PRS) in London is moving ahead quickly, with more than 14,276 units in planning, completed or under construction compared to 7,112 in the rest of the country.
The BPF’s new interactive tracking map shows that there are at least 3,404 completed Build to Rent units in London, compared to 240 in the rest of the UK.
Its figures are also accompanied by a new “build to rent’ manifesto, in which it urges government to change national planning policy to include discounted rent PRS schemes to be included in the definition of “affordable housing” under Section 106 agreements.
The PRS sector, which has been championed by the BPF and won the support of government in 2010 with the Montagu Report, has nevertheless been slow to take off.
The BPF’s Build to Rent map
Ian Fletcher, director of policy at the BPF, told Construction Manager: “There’s always been an appetite from institutional investors, but one of the challenges was finding the stock to invest in, but we’re now getting a pipeline in London, Birmingham and Manchester, and that will start to push out to smaller cities.
“The difficulty has been that it’s difficult to get the viability to stack up in comparison with other forms of tenure [as returns take the form of an annual income rather than outright sale]. But local authorities in London are now more supportive,” Fletcher said, adding that Build to Rent often makes most sense in outer London boroughs such as Croydon, Ealing and Newham.
The sector has provided a new workstream for contractors such as Skanska, Willmott Dixon and Bouygues.
Fletcher estimates that the PRS sector will create the 5,000 new homes in London that has been targeted by the Greater London Assembly, but said that the sector could expand output to around 9,000 homes in London if government and councils gave it the support it needs.
The BPF argues that government should change national planning policy to stress that the appropriate affordable housing on new Build to Rent developments should be discounted market rent – a policy that is already a reality in London.
Build to Rent pipeline in London
Source: Molior
Melanie Leech, chief executive of the BPF, commented: “Today, we are proud to show that the sector has really taken off, and it is great to see how many fantastic projects are either underway or completed, and that residents have quality rented homes.
“There is more that can be done to encourage the sector to grow, however. The GLA has paved the way for Build to Rent, introducing both ambitious targets and supplementary planning guidance, and the map launched today shows that this has really paid off.
“Government has everything to gain from encouraging this sector, which will attract significant institutional investment into UK housing supply, deliver new homes quickly, and drive up standards in the private rented sector, and we hope to see it continue to support it.”
Recent research from the Investor Property Forum suggests that there is £10bn of firm commitments for Build to Rent projects, which would create around £28bn of wider economic benefit.
Andrew Stanford, residential fund manager at LaSalle Investment Management and chairman of the BPF’s Build to Rent Committee, said: “The growing number of long-term institutional investors in the sector will then find a suitable home for their capital, ensuring that housing supply and tenant choice can increase.”
