The British Property Federation (BPF) has published new analysis which shows that delivery across the Build to Rent sector has reached a record high at the end of the Q2 2024, with completion levels hitting 22,000 over the preceding 12 months.
Conducted in collaboration with Savills, the analysis found that completions are now running at over two and a half times the average for the period 2017 to 2019 and are now starting to make an appreciable difference to housing delivery across a growing number of locations within the UK.
This, when included with those homes under construction or with planning approval, has resulted in a year-on-year growth for the sector of 4%, with the regional Build to Rent market now leading London. This brings the total sector pipeline close to 262,000 new homes, or just over the five-year average of total housing completions of all tenures across England of 210,000 dwellings per year.
“The number of Build to Rent homes being completed is now at a record high and the sector is starting to make a demonstrable positive impact on meeting housing need and consumer choice.
“This, along with the continued steady growth of the sector is testament to the strength of the product, investor appetite, and consumer demand for homes for rent.
“However, more action is needed to convert planning consents to starts on site and bring new schemes forward through the planning process.
“We need continued growth to service huge rental demand and look forward to working with the new government to make that happen.”
Ian Fletcher, Director of Policy, British Property Federation
Following this exceptional growth, the total number of completed units now stands at 115,778 – having surpassed 100,000 in the previous quarter. However for the third quarter in a row, the number of completions has remained above the number of starts, with the gap between the two now widening to 10,600 homes, up from 3,400 in the previous quarter.
This is reflected in the sharp contraction in the number of homes currently under construction, down -19% compared to Q2 2023. In London, the fall has been more acute at -21% to 13,200, compared to the regions which have fallen by -19% to 32,200. Across the period Q2 2023 to Q2 2024, there were only 11,500 starts in total, down -30% from the 2017 to 2019 Q2 average, the data highlights.
The continued slow-down in new starts is due to the ongoing challenges in the sector, including build cost inflation and cost of debt, which has also impacted investors, alongside economic and political uncertainty.
“We have seen exceptional growth in the number of completions in just a single quarter, with a 24% increase over the preceding 12 months. This been led by growth across the regions, with the year-on-year increase being 31% compared to London’s 15%.
“This means that Build to Rent is making an increasing contribution nation-wide to housing supply at a time when others tenure types been struggling. It is clear though that more must be done to encourage the number of units under construction to address the -19% decline seen over the past 12 months. This will ensure a steady flow of new homes comes forward to meet demand and meet the wider regenerations benefits of Build to Rent.”
Guy Whittaker, Head of UK Build to Rent Research, Savills
More positively, the total number of Build to Rent homes in planning remain at near record levels with a pipeline of 57,000 homes. Supporting this, the number of consented homes has risen by 17% compared to Q1 2023, though applications have not kept pace with consents, with the number of homes at detailed application stage currently down -31% over the same period, BPF and Savills found.
The number of local authorities with Build to Rent in their pipeline has remained the same as the previous quarter, standing at 208. However, BPF and Savills’ analysis shows that there is strong expectation that these numbers will increase in H2 2024.
At the start of the year, the BPF’s 2024 manifesto ‘Building Our Future’ called for the industry’s partnership with the next government should give investors long-term confidence to boost the building of new homes, with a target of 30,000 Build to Rent homes a year. These representations continue following the election of the Labour government and the development of its detailed policy programme.