Currently, the UK has a shortfall of around 250,000 to 300,000 new builds per annum. The rate of construction simply isn’t fast enough to meet the rate of demand. Furthermore, the rental sector is not particularly attractive, with many amateur landlords doing a shoddy job to keep tenants happy. However, there is a new property rental trend that is growing rapidly, providing both a solution to the shortage of new housing and an alternative to sub-standard rental options. “Build to rent” (BTR) developments are backed by big institutional investors, run by professional companies and now have full government approval.
The British Property Federation calculates that over 105,000 BTR homes are either complete or planned across the UK for 2018 alone – of which just over half are in London. The rest are spread around the country, with big clusters in Birmingham, Liverpool and Manchester.Owning rental homes is a good way for pension funds to get steady, reliable income to pay their pensioners, so a growing number are keen to invest. Legal and General, the giant pensions and insurance company, has earmarked over £1bn to invest in BTR. In the US, as well as many European countries this way of renting is much more widespread. In the Netherlands and Switzerland, institutions have nearly half their property investments in residential.
For private investors it’s an extremely interesting option. You can’t invest into single owner developments, but you can invest into some of the smaller single owner companies that are developing BTR homes. Getting into the sector front end means less risk and a more solid investment than ending up with the back-end product such as a buy-to-let property that poses its own complications and risks.
We have identified several BTR developer direct investments that provide bullish returns and excellent security. Contact us for more information.