The build to rent UK market has become a key sector in the world of real estate, but despite its monumental growth and popularity, overall public awareness about it remains low. However, the demand for the type of services provided by BTR is clear, and there’s plenty of room for the sector to grow.
A cultural shift towards professionally managed, purpose-built developments is becoming the norm. PBSA is the most desired type of accommodation among students, and global businesses such as Apple and Microsoft have a presence in co-working locations managed by the likes of Mindspace and WeWork.
With this in mind, it’s hard to imagine why the build to rent UK market hasn’t overtaken traditional rentals. Professionally managed developments provide greater comfort and flexibility for residents, yet a standard buy to let property is still the main option for many.
What are the Issues?
There are 4.5 million rental households in the UK, and BTR is considered the newest element in the grand scheme of the rental market. It only arrived on these shores in 2011, and with demand outstripping supply, many renters have no choice but to opt for traditional buy to let properties.
On top of that, the entire BTR sector faces a digital challenge. Initial research for many property hunters will usually begin online, and the terms “build to rent” and “BTR” aren’t listed on major UK portals such as Rightmove and Zoopla. Units that fall under the category are referred to as flats or apartments.
This is creating a problem with association. While many individuals might be aware of major build to rent developments, the term isn’t vastly recognised, and the unique selling points of BTR are wrongly being mixed in with regular flats and apartment blocks. If portals aren’t making differentiations, how are individuals meant to find the specific type of property they’re looking to rent?
How can they be Solved?
It’s a culture shock for Americans when they arrive here, as single-property private investors managed by letting agents is not the norm in the US. Properties in the UK are considered as poor quality, overly expensive and inconsistently managed in comparison.
The American and European multifamily sectors have proven that BTR can thrive when it’s given the attention it deserves. Greystar, Atlas Residential, the Canada Pension Plan Investment Board, and LetterOne Treasury Services see untapped opportunities when they look at the build to rent UK market.
But North American investors aren’t the only ones who see a gap in the market. Asian companies such as City Developments Limited and EcoWorld International have shown a particular interest in the country’s BTR scene.
With so many keen parties looking to invest, unlocking the full potential of build to rent in the UK should be a top priority for the Ministry of Housing, investors, and property agents.
Solutions to the problem can include:
A Modern Approach to Housing
Around 300,000 new homes have to be built in the UK every year to keep up with demand, but reaching these targets is a regular struggle. It’s part of the reason why the country is currently facing a housing crisis. And so the first step to unlocking the potential of the UK’s BTR market is to create more developments.
However, that is easier said than done. Most people looking towards build to rent want access to local amenities, and land that fits the bill comes at a premium. Wider regeneration projects are needed to solve the crisis properly, but then there’s the complexities of building on greenbelt land and making brownfield sites fit for habitation to contend with.
There is a lot of potential in the build to rent UK market, but housing as a whole needs modernising before it can be fully reached.
A Digital Overhaul
Association is a powerful tool. It’s how Hoover became synonymous with vacuum cleaners and how “Googling it” has become a phrase for carrying out internet research. But right now, BTR is under the wrong category, and that needs to be corrected online.
As an example, use a search engine (it doesn’t have to be Google) to look for information on two different terms. First look for “flats” and then look for “build to rent.”
When you search for “flats”, all if not most of the results will be for portals showing flats for sale in your area, with Rightmove and Zoopla being at the top of our own results.
When you search for “build to rent”, most results are only there to describe what the term actually is. To show the extent of the problem, a blog from Rightmove appears in the results detailing why BTR is so beneficial to residents, yet the link they include in the blog takes you to the general property search page instead of a dedicated BTR page.
By not acknowledging build to rent as its own specific sector, popular portals in the UK have created a platform where BTR is essentially hidden away from property hunters. The term hasn’t been able to catch on, which has caused the sector to blend in with standard apartment buildings.
Portals have to be convinced that build to rent is different. Residents benefit from a range of premium amenities, higher quality accommodation and a significantly improved relationship with property managers. The ability to rate property management in the same vein as AirBnB and TripAdvisor could be the key to segmenting BTR as a standalone sector of the rental market.
Will the Build to Rent UK Market Reach its Potential?
The standard of BTR is in a completely different league to traditional PRS, so it’s more of a matter of “when” BTR will reach its as opposed to “if”.
We’re already seeing changes with Home Views having an entire section of their accommodation review site dedicated to BTR. While portals haven’t adopted a similar approach yet, the likes of Rightmove and Zoopla aren’t necessarily against change.
It may be that they’re waiting for the build to rent UK market to reach a higher level of maturity before showcasing, not realising that they actually have the means to make BTR more mainstream themselves.
But with thousands of units already built and many more in the planning process, we could see the market reach its full potential much sooner than expected.