Global property consultancy Knight Frank, together with residential property review site HomeViews, has today released new research highlighting the volume of capital committed to the UK’s professionally managed rental sector.
As more investment and development takes place in the Build to Rent (BTR) sector, this year, Knight Frank has collaborated with HomeViews, to provide a unique insight into what those living specifically in BTR developments value the most about their accommodation and how residents review BTR during these uncertain times.
£41 billion committed to BTR
The Knight Frank / HomeViews Multihousing Report 2020 estimates that the volume of capital committed to the market for professionally-managed rental accommodation in the UK to date is £41 billion, up 17% from £35 billion in 2019. Despite the ongoing market headwinds caused by the Covid-19 pandemic, the firm says 2020 will see the highest level of investment ever as investors look for long-term, secure income producing assets.
A further £19 billion of additional capital is ready to be deployed in schemes with planning granted.
This growing appetite for investment into the sector is underpinned by one in five households now renting privately, up from one in ten in 2001, according to the English Housing Survey. Over that same time, the proportion of owner-occupiers has dropped from 70.4% to 63.8%.
BTR resilience
The lockdown period, meanwhile, has served to demonstrate the relative resilience of the BTR sector from an investment perspective, with rent collections having been resilient throughout, averaging 95.2% between March and August.
James Mannix, head of residential development and investment at Knight Frank, commented: “Demand for income-producing residential assets continues to grow. It is forecast that 2020 will be a record year for investment into build to rent stock with £2.7 billion spent in the year to date and a figure topping £4 billion anticipated for the whole year.
“The capital committed has come from both new and established market players and is testament to the long-term opportunity afforded by the sector.”
Growth potential
The Multihousing Report also examined the growth potential of BTR in the UK. The analysis shows there are now 46,178 purpose-designed BTR homes complete in the UK within large schemes of more than 75 units. A further 84,350 homes are either under construction or with planning granted and will be built, let, and managed by professional investors as homes for rent. Despite this pipeline, this represents just 2% of total rental dwellings.
Looking to the future, Oliver Knight, head of residential development research at Knight Frank, comments: “Rental markets have proven to be resilient in times of uncertainty in the past and this will support the market in the medium term. In turn, this will drive further investment into the sector and we expect the capital committed will continue to rise as investors look to increase their exposure to real estate assets that offer secure and stable long-term income streams.
Rory Cramer, CEO & Co-Founder, HomeViews, commented: “Overall, the thousands of reviews we see on HomeViews tell a broadly positive story of the UK’s new build developments. However, private tenants rate their buildings higher than owners and BTR tenants rate their developments highest of all.
“Many of the issues we see being raised by owners and private tenants represent problems that BTR operators have found solutions to. The factors connected to higher ratings for BTR developments – communal events, pet-friendly, concierge, building management – are the very areas where shortcomings lead to much lower building ratings elsewhere, especially for older developments.”
Enhanced service quality
HomeViews’ analysis of resident reviews submitted during the crisis has highlighted the enhanced level of service that many BTR residents enjoy, as well as consistent references to ‘community’ and ‘neighbourhood’. Longer-term, as tenant priorities change as a result of Covid-19, Knight Frank expects the service-driven model adopted by operators – and valued by residents – will emerge as offering clear advantages over the traditional buy-to-let sector.
Cramer continues: “The move towards renting is being expedited by a successful BTR industry responding swiftly to residents’ needs and concerns. We now have the opportunity to draw lessons from BTR successes and push standards higher for all residents across the UK’s new build industry.”
HomeViews is an independent review platform for residential developments in the UK. Dubbed the ‘TripAdvisor for property,’ HomeViews allows prospective buyers and tenants to make an informed decision on where to live based on unique insights from verified resident reviews. Launched in February 2019 and with over 13,000 reviews to date, HomeViews provides a powerful research and marketing tool for the residential property sector while helping to raise standards in the built environment. For further information please contact www.homeviews.com.
Knight Frank LLP is the leading independent global property consultancy. Headquartered in London, Knight Frank has more than 19,000 people operating from 512 offices across 60 territories. The Group advises clients ranging from individual owners and buyers to major developers, investors and corporate tenants. For further information about the Company, please visit knightfrank.com.
