The private rented sector in Great Britain has faced a raft of challenges in recent years, culminating in there being 300,000 fewer rental homes than there were five years ago.
While many small private landlords have fled the sector, the number of units built and let by institutional investors, known as build to rent (BTR), has grown.
As BTR developments begin to change suburban streets as well as city skylines, we explore what the BTR premium is and how this might change in the future. With a record 45% of all BTR homes available to rent outside the capital this year, we look at how the premium varies for different property types in different locations.
Over the last 18 months, the widespread lack of homes to rent has fuelled rental growth across the country and the same is true for BTR properties. Overall, there are nearly two thirds (61%) fewer homes available to rent than in 2019, and rents are rising at around 9.8% year-on-year (YoY). Build to rent units have matched this growth, with rents increasing 12.6% YoY to an average of £1,840 pcm.
There are now around 72,670 BTR homes in Great Britain, 19% more than at the beginning of 2021. Yet only 1.5% of private tenants call a BTR property their home. Given the belief that BTR has the potential to plug the supply gap in the rental sector, we analyse how a new BTR scheme impacts rents on homes owned by private landlords in the area. And as the sector continues to grow, how do new BTR developments affect existing ones? But perhaps most interestingly for institutional investors, we explore where future opportunities lie and question whether a shift to suburbia is the answer.
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