Before Covid brought with it lockdown restrictions and changes to every industry imaginable, the Build-to-Rent (BTR) sector saw £1 billion of capital committed in Quarter 1 of 2020. Since then, BTR has proven to be a resilient asset class that is underpinned by strong fundamentals.
The BTR trend is constantly accelerating in the UK and has doubled in size over 20 years. At the end of 2020, a record £3.5 billion was invested into the sector. By the end of the last quarter, investment was totalling £955.7 million already. The UK’s BTR industry is looking destined to follow the growth pattern as seen in the US, and Covid has accelerated this trend.
The lockdown periods saw people’s lifestyles change in many ways. People needed to seek out flexibility that fit in with their new ways of living and working. BTR was, in turn, the perfect answer to their conundrum.
All Under One Roof
The most significant impact from Covid is the changes it has brought about to our working environment. The typical ‘work day’ for many Brits is now unrecognisable. As offices encouraged staff to stay at home and working hours became more flexible, people’s homes also had to adapt.
Most became stuck under one roof 24/7, with only the escape of their daily exercise. Suddenly what these people needed from their home environment was considerably different, and their reasons for living for choosing their current property were no longer applicable.
BTR, however, can offer something no other rented properties can: built-in facilities. Need to exercise? Go to the on-site gym. Want to watch a film? Take a seat at the cinema. It is a new way of living that is incredibly exciting to be part of and convenient to so many potential renters, especially after the events of Covid.
Solid Solution to High Street Decline
As we have discussed before, our high streets are in turmoil. Retail units are being abandoned as the pandemic has hastened their removal. The following result has left huge gaps within cities and towns across the country. Seeing as the BTR market is on the up, why should we not look to freshen the place up? It is much needed, now more than ever.
Having the best of both worlds will bring life to our cities and towns. Instead of letting them go to waste, give them new meaning. Since the new Permitted Development Rights (PDRs) have been introduced, this is a realistic goal. One which should be incorporated before it is too late.
Perfect for Both Older and Younger Markets
Investors aim more towards a younger demographic – those who enjoy socialising and having the convenience of things right around the corner. In addition to this demand, there is also a possibility that older generations to be targeted too.
As we get older, it becomes increasingly difficult to get from A to B. Having everything on our doorstep then would be fantastic. BTR investors can, therefore, look to aim for the new market of over-55s who are currently moving towards renting due to the pandemic.
Capitalise on Those Moving Away from the Capital
Finally, investors should take note of those moving away from London. Hamptons estate agents say first-time buyers account for over a third of households bought outside the capital, up from 29% in 2019. Swapping a cramped, sometimes overpriced flat for an apartment with the convenience of on-site facilities and other benefits is a smart move in many people’s eyes.
The BTR sector has come into its own at the right time, it must be said. The benefits it can offer to a wide variety of potential demographics should not be overlooked. As time goes by and the pandemic comes to a close, renters will be tempted more and more while investors, in turn, will see it as a brand new opportunity too good to turn down.