Build-To-Rent Sector Sees Record Levels Of Investment

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The build-to-rent sector has seen record levels of growth over the past year, according to the Buy Association. It reports that new data show that investments reached £2.35bn in the first six months of 2021, which represents an almost 80% increase since the same time last year.

So what is driving the current boom in build-to-let investments? Well, according to City Rise, tenant demand is at an all-time high at the moment. The average UK rent now exceeds £1000 per month for the first time on record, and 68% of tenants have recently experienced rent hikes.

Increased demand for rental properties can also be linked to the stamp duty holiday, which has artificially inflated house prices over the past year. This has made some potential buyers who are currently renting hold back until the housing market cools off. The natural turnover of tenants has slowed, meaning that fewer rental properties have been available.

City centres are also seeing a strong bounce-back in rental demand at the moment. This is partly due to corporate tenants returning to urban locations as the lockdown restrictions are lifted, and offices open up again. Student housing is back in high demand once more, as universities shift back to face-to face teaching after 18 months of remote lectures.

The Buy Association predicts that the built-to-rent investment market is set for steady growth over the next few years, especially in the regions. 70% of funding has so far been for schemes outside London, as people seek more spacious homes than are widely available in the capital.

Birmingham is a particularly strong area of growth for new investment, as are some smaller regional cities, such as Southampton and Leicester. The north-west is currently thriving in all areas of the property market, particularly commuter towns around Manchester, such as Preston, Wigan, and Oldham.

With a resilient performance during the pandemic, and an optimistic forecast for the next five years, the built-to-rent sector is being viewed as a strong investment prospect at the moment.

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