Unlocking the Potential of Build to Rent UK

The build-to-rent UK market is booming.

In Q1 2022, a record £1.6bn was invested into the sector, which grew by 14% from the previous 12 months. Yet, despite its impressive growth, overall public awareness remains low. Even so, demand for the type of services provided by build-to-rent is apparent, and there’s plenty of room for unprecedented growth in the years to come.

Here, we look at how to unlock the potential of build-to-rent in the UK and whether it will become the primary way to rent a home.   

Hands up if you’ve heard of build-to-rent 

A primary issue build-to-rent faces revolve around the name. Renters don’t particularly care if a home is owned by a private landlord or operations team; they look at properties as a place they can live in without checking if specific names like BTR and PRS are associated with them.   

Therefore, they may move into a home without knowing it’s a build-to-rent property. What they care about is the living experience, and a cultural shift towards purpose-built developments with on-site amenities and professional management is becoming the norm, even if renters aren’t aware of specific labels.   

A new way of living 

Purpose-built student accommodation (PBSA) is the most desired type of accommodation among students. At the same time, 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 primary option for many. 

What are the issues? 

There are 4.5 million rental households in the UK, and BTR is considered the new kid on the block in the grand scheme of the rental market. It only arrived on these shores in 2011 and didn’t really begin a marketing push until around 2017.   

On top of that, the entire build-to-rent sector faces a digital challenge. Initial research for many property hunters usually begins online. Until recently, terms like ‘build-to -rent’ and ‘BTR’ weren’t listed on major UK portals such as Rightmove and Zoopla. Units that fall under the category are referred to as flats or apartments. Even now, these properties are differentiated as ‘built for renters’.   

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. The unique selling points of BTR are still often wrongly associated with regular flats and apartment buildings. If portals aren’t making differentiations, how are individuals meant to find the specific type of property they’re looking to rent? 

How to solve the problem 

It’s a culture shock for Americans when they arrive on these shores, as single-property private investors managed by letting agents isn’t the norm in the United States. In comparison, properties in the UK are considered poor quality, overly expensive and inconsistently managed. 

The American and European multifamily sectors have proven that build-to-rent can thrive when given the attention it deserves. Greystar, CA Ventures, Legal & General, Round Hill Capital, and Realstar see untapped opportunities in 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 build-to-rent 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 include: 

A modern approach to housing 

Around 300,000 new homes have to be built in the UK annually to keep up with demand, but reaching these targets is an everyday struggle. It’s partly why the country is currently facing a housing crisis. And with rising interest rates and a cost-of-living crisis, the problem looks like it will only get worse before it gets better.   

As a result, we can expect even more renters in the next few years to join the 4.4m PRS households in the UK. Therefore, the first step to unlocking the potential of the UK’s BTR market and solving the housing crisis is to create more developments. 

That’s easier said than done, however. Most people looking at build-to-rent want access to local amenities, and land fitting the bill comes with a premium. Broader regeneration projects are needed to solve the crisis correctly. Still, there are the complexities of building on greenbelt land and making brownfield sites fit for habitation. 

There is plenty of potential in the build-to-rent UK market, but housing as a whole needs modernising before it can be fully realised. 

A digital overhaul

Association is a powerful tool. It’s how Hoover became synonymous with vacuum cleaners and why “Googling it” has become a phrase for carrying out an internet search. Right now, build-to-rent is under the wrong category, and that needs correcting online. 

For instance, 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 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 means. The majority of the results are ‘pros and cons’ blog posts detailing what you can expect from moving into a build-to-rent home. This is great for spreading awareness, but they don’t help with actually finding BTR homes.    

And there’s still the issue of people searching for the term ‘build-to-rent’. What incentive does a renter have to look up this phrase if they’re unaware of it to begin with?   

Fortunately, the landscape is changing slightly. Whereas before, property portals refused to acknowledge build-to-rent as its own category, today, some homes are listed as ‘built for renters’. Even so, more can be done. For instance, the portals could include a dedicated section for build-to-rent homes in their filters.   

Will the build–to-rent UK market reach its potential? 

The standard of build-to-rent is in a completely different league to traditional PRS. 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 is also key to segmenting BTR as a standalone sector of the rental market. 

We already see changes with Home Views having an entire section of their accommodation review site dedicated to build-to-rent. Another resource is Love to Rent, which highlights BTR homes across the UK and gives renters the lowdown on everything from services to amenities.

Portals are slowly catching up, but the likes of Rightmove and Zoopla could do with moving faster.  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 a proactive role in helping to make build-to-rent more mainstream in the UK.

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. 

If you build it, they will come 

Build-to-rent has come a long way in the last five years. In that time, we’ve seen portals list homes as ‘built for renters’ and more general awareness.

Yet, there’s still plenty to do for build-to-rent operators, letting agents and those associated with BTR. On its current trajectory, it seems like it’s a matter of ‘when’ not ‘if’ build-to-rent becomes the de facto way to rent a home in the UK.