The number of completed Build to Rent (BTR) homes in the UK grew by 19% over the past 12 months reaching a combined total of 72,668. London saw an extra 5,802 BTR homes completed whilst a further 5,901 were completed outside the capital.
The UK BTR sector is growing & maturing quickly but it is still very small.
In the US the comparable number of completed multi-family units was over 375,000. That's a multiple of thirty two times more purpose built rental homes completed than the UK in just one year. In Dallas, Texas alone 25,976 units were delivered in 2021 - more than double the number for the whole of the UK.
The pipeline of BTR homes under construction in the UK is growing quickly, especially outside of London, and currently stands at 46,304 units.
Again, however, this figure which is for the entire country is made to look very small when compared to a number of large US cities in isolation. Dallas has close to 45,000 units currently under construction and is closely followed by Austin (41k), Phoenix (38k) and Washington D.C. (36.5k).
The number of UK suburban BTR homes (as opposed to urban high rises) is also growing. Having been a somewhat niche sector in the market historically, the success and maturation of early developments combined with a pandemic induced race for space has seen a large number of firms committing capital to this particular asset class. Blackstone, Legal & General, Goldman Sachs & TPG are just some of the firms with major capital either already invested or announced & ready to deploy into the right opportunities in single family homes.
There are around 8.5k suburban BTR homes already completed and a further 9.5k currently under construction or at the planning stage. These numbers only reflect properties specifically allocated to become purpose built rental homes.
It is highly probable that a significant number of homes in the planning process or at various stages of construction in the "for sale" market may well end up becoming suburban BTR homes. This is in light of the volume of capital chasing this type of stock, the likely winding down of the government's Help to Buy equity loan scheme as well as a possible deterioration in economic conditions and further rises in interest rates and therefore mortgage costs. In such circumstances, it is not too hard to imagine some of the volume house builders in the UK looking to sell larger quantities of homes to deep pocketed institutional investors with long term investment horizons.
Ultimately, whilst the UK BTR industry is expanding quite quickly, it is doing so from a very low base. Compared to the far more mature US market and indeed many European countries, UK BTR is tiny with enormous room for growth in the years ahead. With plenty of capital and investment commitments to support it, the future looks promising.
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