£27.7 billion targeting UK build to rent sector

£27.7 billion is set to be invested in the UK’s build to rent sector over the coming five years.

The sector, which is intended to boost supply levels in the private rented market, is a priority for the UK government, which is putting its eggs in the baskets of developers, while introducing punitive measures and costs for smaller landlords.

With institutional investors from overseas destinations, like North America, looking for new markets to deploy their capital, the sector is hoping to attract funding from overseas. And, according to CBRE’s new Build to Rent Barometer, which monitors and measures domestic and global investor interest in Build To Rent, a large chunk of investment is currently targeting the scheme.

There is currently £27.7 billion worth of equity targeting the sector over the next five years. The research suggests that a quarter of this capital is domestic, while almost half originates from North America. The main constraint for investors continues to be a lack of available stock with the ratio of deployable equity to marketed stock currently at 14:1.

“There is limited standing stock in the UK which has led to increased interest from investors looking to acquire either platforms or development opportunities released by housebuilders who see this new sector as a great way to accelerate delivery of stock,” says Peter Burns, Managing Director of CBRE UK Development.

While London has traditionally been the focus of their attention, the UK’s regional cities are becoming increasingly prominent as American funds begin to explore the market and demonstrate their willingness to move higher up the risk curve in non-London markets that offer a strong investment case.

Furthermore, while London previously offered the majority of build to rent development units, the 70,000 strong pipeline of units that are either complete or under construction is now evenly split between the capital and the UK regions.

This is especially evident in areas providing a high volume of good quality stock near fast transport hubs. The UK is set to be a huge benefactor if developers can achieve the scale required to meet the growing demand.


Multi-million pound deal gives build to rent a boost

6th December 2016

A new multi-million pound deal is giving build to a rent a boost in the UK, as the government seeks to grow the number of homes in the private rented sector.

This latest private rent deal will unlock £400 million of development, under the government’s programme to increase investment in purpose built rental properties, and will grow the amount of good quality rental homes in Leeds, Manchester and Birmingham.

The project is one of the largest private rental sector investments in the UK and will receive £45 million funding from the government’s new Home Building Fund ─ which makes money available to help kick-start new development and housebuilding.

The scheme will create more than 2,000 homes for private rent and create thousands of jobs, said Housing Minister Gavin Barwell. Specifically, up to 1,500 new construction jobs are anticipated across the three cities from the deal, which will provide 2,062 rental homes. These will include 995 homes in Manchester, 744 homes in Leeds and 323 homes in Birmingham.

National developer Dandara Group is spearheading the project with support from the government’s housing delivery agency, the Homes and Communities Agency, and banking giant HSBC.

“Dandara has already built more than 2,500 properties of this type in the last 10 years in the UK, including Scotland’s largest private rented sector (PRS) scheme of almost 300 properties in Aberdeen, acquired by LaSalle Investment Management on behalf of a large pension fund,” says founder and chairman of the Dandara Group, Dan Tynan. “We are now in a position to actively work with institutions, and independently, to make a sizeable contribution to this market.”