Build to Rent Market Report – UK 2020-2024
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The 3rd edition of the “Build to Rent Market Report – UK 2020-2024” has been published by Barbour ABI. The report covers the Build to Rent (BTR) market and the associated UK Private Residential (PRS) sector which have experienced significant market growth in recent years. This edition specifically reviews construction/development opportunities in the BTR sector.
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The 3rd edition of the “Build to Rent Market Report – UK 2020-2024” has been published by Barbour ABI. The report covers the Build to Rent (BTR) market and the associated UK Private Residential (PRS) sector which have experienced significant market growth in recent years. This edition specifically reviews construction/development opportunities in the BTR sector.
Key issues covered in the report:
- Structure, size and value of the UK BTR/PRS sector. Analysis of PRS stock by tenure, property type and age. Future growth and prospects with forecasts to 2024.
- The BTR market, construction output estimates, volume estimates, key drivers in the market.
- Regional analysis of BTR examination of starts and completions, analysis of key factors driving regional expansion.
- Key drivers – housing availability & supply issues, rising house prices, planning constraints, land availability, etc.
- Review of the BTR/PRS investors and developers.
Areas of particular interest:
- Value and ownership of the UK PRS sector. Smaller private landlords, institutional and large corporate investors.
- Analysis of the BTR market, scale of operation, growth factors, forecasts to 2024, changing structure of the UK housing industry.
- The largest volume of BTR is coming through in urban city centres with London, Manchester, Birmingham and
- Leeds accounting for a large proportion of the sector.
- Leading developers of BTR units in London.
- Government support for PRS and BTR – including the Homebuilding Fund and availability of cheap finance.
Some companies featured within the report:
Dandara, FirstPort, Allsop, Savills, Vertus, Realstar, M & G Real Estate, Aberdeen Standard Investments, Lasalle Investment Management, Delancey Real Estate Asset Management, Legal & General Investment Management, Goldman Sachs, Moda Living & Apache Capital’s, BMO Real Estate Partners, Oxford Properties, Aberdeen Standard Investments, Brookfield Asset Management Inc (BAM), Canary Wharf Group (CWG), Qatar Investment Authority, Edmond de Rothschild Real Estate Investment Management (ERREIM), Cording UK Residential Investment Fund, Delph Property Group, Redrow, Countryside Group, Crest Nicholson, Telford Homes, Muse Developments, Balfour Beatty, Cala Homes, Later Living
Key areas covered in the report
THE BUILD TO RENT MARKET
- Overview of the PRS and BTR sectors in the UK.
- Overall size of BTR. UK rental demand and future growth of the UK BTR. Analysis of PRS stock by type and age.
- Outline of the UK BTR market by region & key cities, including London.
- The BTR market size, recent growth history, future prospects with forecasts to 2024.
- Starts and completions in BTR market – forecast of cumulative completions to 2024.
- BTR market in terms of volumes and values.
KEY ISSUES AND MARKET DRIVERS
- Housing supply – UK housebuilding progress and targets.
- Housing measures in the 2019 and 2020 Budgets and Financial Statements.
- Planning considerations in the PRS and in the BTR industry.
- Planning for BTR – changes to the National Planning Policy Framework (NPPF); changes to Permitted Development
- Rights (PDR); land availability – use of public sector land for PRS schemes; housing zones.
- House prices and affordability – mortgage availability.
- Tax changes affecting Buy-to-Let and reduction in the number of smaller-scale PRS landlord
- Government support and funding for PRS and Build-to-Rent Fund/Home Building Fund; Private Rented Sector
- Housing Guarantee; Affordable Homes Guarantee Programme (AHGP).
- Sources of funding, increased interest of institutional investors in the BTR industry.
- Ownership of the BTR market – leading investors/developers in the BTR; BTR developer/operator profiles; etc.
KEY STAKEHOLDERS
- Review of the key stakeholders in the BTR/PRS market – identification of leading institutional investment organisations and real estate asset/fund manager.
- BTR/PRS Investors and developers – specialist development, design, construction, delivery and property management organisations as swell as housebuilders specialising in BTR.
The number of households in the private rented sector (PRS) has increased rapidly over the past decade, partly reflecting affordability barriers to home ownership. Since the early 2000s, the PRS has been one of the fastest growing sub-sectors of the property market. Since 2012/13, it has overtaken social housing to become the second largest tenure after home ownership, peaking at 5.4 million households across Great Britain in 2016. Growth in the PRS had coincided with a decline in other tenures including social rent and owner-occupier. However, between 2014-2018 home-ownership levels had increased falling sharply from 17.8m to 16.5m in 2019.
CONTENTS
RESEARCH SERVICES OFFERED BY AMA RESEARCH 3
1. INTRODUCTION 8
1.1 BACKGROUND 8
1.2 SOURCES OF INFORMATION 9
1.3 ACRONYMS FREQUENTLY USED IN THE REPORT 10
2. SUMMARY 11
3. PRIVATE RESIDENTIAL RENTAL MARKET OVERVIEW 14
3.1 INTRODUCTION AND DEFINITION 14
3.2 OVERALL SIZE OF UK PRS SECTOR 14
3.2.1 Recent Trends 14
3.3. PRS STOCK 15
3.3.1 By Age of Dwellings 15
3.3.2 By Type of Dwelling 16
3.3.3 Locations of PRS Dwellings 17
3.4 DEMOGRAPHICS 18
3.4.1 Age of PRS Households 18
3.4.2 PRS Household Size 20
3.4.3 Household Incomes 21
3.5 REGIONAL DISTRIBUTION OF PRIVATE RENTAL HOUSEHOLDS 22
3.6 OWNERSHIP OF PRIVATE RENTED HOUSING 24
4 MARKET SIZE, TRENDS AND DRIVERS 26
4.1 DEFINITION 26
4.2 MARKET SIZE, RECENT TRENDS AND FORECASTS 26
4.3 KEY MARKET FACTORS 30
4.3.1 Housing Affordability 30
4.3.2 Reduction in Grants for Social Housing and the Decline in Newbuild Completions 33
4.2.3 Growth in Institutional Investment 35
4.2.4 Impact of Property Taxation on Private Landlords 36
4.2.5 Planning Issues 38
5. REGIONAL VIEW 41
5.1 OVERVIEW 41
5.2 GREATER LONDON 41
5.3 REGIONAL OVERVIEW 47
5.4 GREATER MANCHESTER 49
5.4.1 Cities of Manchester and Salford 49
5.4.2 Other Greater Manchester 51
5.5 THE MIDLANDS 51
5.5.1 Birmingham 51
5.5.2 Other Midlands 53
5.6 LIVERPOOL AND MERSEYSIDE 53
5.7 YORKSHIRE AND THE NORTH EAST 55
5.7.1 Leeds 55
5.7.2 Sheffield 56
5.7.3 Rest of Yorkshire 57
5.7.4 Newcastle and Tyneside 57
5.8 REST OF ENGLAND AND WALES 57
5.8.1 Bristol and Bath 57
5.8.2 South Hampshire Metropolitan Area 58
5.9 SCOTLAND AND WALES 59
5.9.1 Glasgow 59
5.9.2 Edinburgh Region 60
5.9.3 Cardiff 60
6. BTR/PRS INVESTORS AND DEVELOPERS 61
6.1 LEADING INSTITUTIONAL INVESTMENT – PASSIVE INVESTORS 61
6.1.1 Overview 61
6.1.2 Leading Real Estate Asset/Fund Managers 62
6.2 BTR/PRS INVESTOR-DEVELOPERS (OPERATORS) 68
6.2.1 Overview 68
6.2.2 Larger Investor-Developers (Operators) 69
APPENDICES 82
APPENDIX A: ECONOMIC ENVIRONMENT 82
A.1 OVERVIEW AND OUTLOOK 82
A.2 GDP 82
A.3 INFLATION AND INTEREST RATES 84
A.4 EMPLOYMENT AND WAGES 85
A.5 HOUSEHOLD CONSUMPTION 86
A.6 STERLING 87
TABLES AND CHARTS
CHART 1: CUMULATIVE BUILD TO RENT COMPLETIONS 2016 TO 2020 WITH FORECASTS FOR 2021 TO 2024 – NUMBER OF UNITS 11
CHART 2: GB DWELLING STOCK BY TENURE 2013 TO 2019 – BY NUMBER OF DWELLINGS AT 30 APRIL EACH YEAR 15
CHART 3: ENGLAND PRIVATE RENTAL DWELLINGS 2008 TO 2018 – BY AGE OF DWELLING 16
CHART 4: ENGLAND PRIVATE RENTAL BY TYPE OF DWELLING 2008 TO 2018 – NUMBER (000’S OF DWELLINGS) 17
CHART 5: ENGLAND PRIVATE RENTAL BY LOCATION OF DWELLING 2008 TO 2018 – NUMBER OF DWELLINGS (000’S) 18
CHART 6: PERCENTAGES OF AGE GROUPS (AGES OF HRPS*) LIVING IN PRIVATE RENTAL HOMES 2010-11 TO 2018-19 19
CHART 7: MIX OF AGES OF HRPS LIVING IN PRIVATELY RENTED HOUSING 2010-11 TO 2018-19 20
CHART 8: PRIVATE RENTAL HOUSING BY SIZE OF HOUSEHOLD 2010-11 TO 2018-19 – NUMBER OF HOUSEHOLDS 21
CHART 9: GROSS ANNUAL INCOME RANGE OF HRP & SPOUSE/PARTNER (ENGLAND) 2010/11 TO 2018/19 – BY NUMBER OF PRS HOUSEHOLDS 22
CHART 10: ENGLAND REGIONAL DISTRIBUTION OF PRIVATE RENTAL HOUSEHOLDS 2010/11 TO 2018/19 – NUMBER (000’S) 23
CHART 11: ENGLAND REGIONAL DISTRIBUTION OF PRIVATE RENTAL HOUSEHOLDS 2010-11 TO 2018-19 – % OF ALL DWELLINGS 24
CHART 12: OWNERSHIP OF PRS STOCK IN ENGLAND 2018 – % OF TENANCIES BY NUMBER BY LANDLORD TYPE 25
CHART 13: BUILD TO RENT IN UK ANNUAL STARTS, COMPLETIONS AND CUMULATIVE COMPLETIONS 2017-2020 WITH FORECASTS FOR CUMULATIVE COMPLETIONS 2021-2024 28
CHART 14: ENGLAND – RATIOS OF MEDIAN HOUSE PRICES TO MEDIAN GROSS ANNUAL RESIDENCE-BASED EARNINGS BY REGION 2009 TO 2019 31
TABLE 15: PRIVATE RENTERS EXPECTATIONS OF BUYING A HOME 2018 – BY % OF EACH AGE GROUP 32
CHART 16: PRIVATE RENTERS REASONS FOR BEING UNABLE OR NOT WANTING TO BUY A HOME 2018/19 – % BY AGE GROUP 33
CHART 17: ENGLAND AFFORDABLE/SOCIAL HOUSING COMPLETIONS BY TENURE 2015-16 TO 2018-19 – NUMBER OF DWELLINGS BY TENURE 34
TABLE 18: BUILD TO RENT GROWTH IN LONDON AND KEY REGIONS AS AT Q4 2020 41
CHART 19: AVERAGE HOUSE PRICE TRENDS BY REGION MARCH 2015 TO MARCH 2020 42
CHART 20: MOST EXPENSIVE LONDON BOROUGHS TO LIVE BY RATIO OF MEDIAN HOUSE PRICE TO MEDIAN GROSS ANNUAL RESIDENCE-BASED EARNINGS 2010 TO 2019 43
CHART 21: LONDON PRS DWELLINGS BY NUMBER AND BY % OF TOTAL DWELLINGS APRIL 2013-14 TO 2019-20 44
TABLE 22: LONDON BOROUGHS 10-YEAR TARGETS FOR NET HOUSING COMPLETIONS 2019-20 TO 2029-29 45
CHART 23: BUILD TO RENT IN LONDON ANNUAL STARTS & COMPLETIONS AND CUMULATIVE COMPLETIONS 2016 TO 2020 WITH FORECASTS 2021TO2024 46
CHART 24: BUILD TO RENT IN THE REGIONS ANNUAL STARTS & COMPLETIONS AND CUMULATIVE COMPLETIONS 2015 TO 2020 WITH FORECASTS 2021 TO 2024 48
CHART A1: GVA CHAINED VOLUME MEASURES KEY CONSTITUENT ELEMENTS 2015-2020 84
CHART A2: CPI INFLATION AND BANK OF ENGLAND BASE RATE 2008-2023 85
CHART A3: AVERAGE WEEKLY EARNINGS DATA (GB) TOTAL PAY – 2014 TO 2019 (SEASONALLY ADJUSTED) 86
CHART A4: DI PER CAPITA & SAVINGS RATIO AT CURRENT PRICES 2008 TO 2023 86
CHART A5: EXCHANGE RATE FLUCTUATIONS 2015 TO 2019, STERLING TO THE DOLLAR AND THE EURO SPOT RATES 88
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