Housebuilders Looking to Profit from Generation Rent

Property developers are looking to gain profit from the number of private renters by investing further in purpose-built rental accommodation.

The Build to Rent model provides housebuilders with a new method to generate profit from Generation Rent, which largely explains why the sector is predicted to become a vital growth area in the housebuilding market.

According to the Housebuilding Market Report – UK 2018-2022, including residential conversions, there were around 258,000 new dwellings delivered across the UK in 2016/17, up by 13% on the previous year.

For 2017 to 2018, it is estimated that the rate of growth has been similar, with 280,000 new homes being added in part to purpose-built private rented housing.

In addition to attracting some of the larger housing associations, an increasing number of larger private housebuilding groups are also diversifying into Build to Rent, usually in partnership with private investors.

To obtain the desired rates of return, concentration on their investments is on large-scale apartment developments in major locations of London, the West Midlands and the North West, which offer economies of scale.

In regards to purpose-built student accommodation (PBSA), this is mainly being achieved through the increased specification of prefabricated building components and even full offsite building systems such as volumetric modular construction.

Separate research by the British Property Federation (BPF) earlier this year also found that there has been a significant rise in the number of Build to Rent homes complete, under construction and in planning across the UK.

In the UK there are currently in excess of 100,000 Build to Rent homes across all stages of the development lifecycle.

Director of Real Estate Policy at the BPF, commented: “The Build to Rent sector is evolving quickly, with significant delivery in the regions and more houses, rather than just apartments, coming forward.”