14 Oct 2020 |

The BTR Hub: a one-stop shop for the build-to-rent sector

Today the BPF, CREFC Europe and UKAA launch the BTR Hub – a Property Industry Alliance initiative to provide a one-stop shop for those wanting to learn about the build-to-rent sector.

To mark the occasion, the driving forces behind the Hub give us the lowdown on the sector’s resilience in the face of Covid-19, the sector’s outlook for 2021 and why they have launched a new online resource to support stakeholders’ understanding of build-to-rent (BTR).

Ian Fletcher, Director of Real Estate Policy, British Property Federation:

The BTR sector now has over 170,000 homes in the pipeline – including, for the first time ever (as of Q3 2020), over 50,000 homes completed.

That’s an incredible achievement, given the sector is only about five years old in the UK, but we’ve only just scratched the surface of its potential. It has proven to be resilient in the face of Covid’s economic headwinds, and it is set to grow and deliver more professionally managed, high-quality rental homes across the country.

The sector will play a key role in supporting the government’s ambitious plans to ‘level up’ the country’s regions and in building a shared recovery where more people across the country, whether they choose or need to rent, will have more choice of rental properties available to them.

The BTR sector’s growth will aid the Prime Minister’s ambitions to ‘Build Build Build’, with valuable construction jobs being created in all parts of the UK, but this requires maintaining momentum behind converting the sector’s planning applications to construction starts. This should remain a priority for all in the sector, and those who support it in local councils and central Government.

For new investors in BTR, as well as the public sector and other stakeholders seeking to learn more about the sector – to better understand the sector’s investment proposition or how BTR can support housing delivery in towns and cities across the UK – our new BTR Hub has pulled various information sources together to facilitate this learning. This should play a large part in supporting BTR’s future and the consumers who are benefitting from more choice in the rental market.

Bill Hughes, Chair of the PIA & Head of Real Assets, Legal & General:

Compared to many of its traditional commercial counterparts; the BTR sector has weathered the pandemic resiliently.

Rental receipts have fallen for much of the market, although collection levels and occupancy remain high for BTR, with LGIM’s portfolio registering 97.6% rent collection and occupancy having rebounded back to pre-lockdown levels by the end of August 2020.

Whilst the full economic fall-out may not yet have filtered through, there are compelling reasons to be reassured of BTR’s resilience. Residential rental investment has typically remained robust in periods of uncertainty. Through the 2008/09 financial crisis, occupancy levels in the UK residential sector only fell to 96%, 2% lower than the long-term average.

Emerging economic trends from the pandemic also look supportive. Recessionary periods are typically followed by increased demand for rental homes. Banks are also tightening credit conditions with high LTV mortgage products reducing substantially. Meanwhile, BTR will increasingly represent an aspirational choice, offering quality accommodation, functional co-working space and located close to desirable amenity.

BTR is continuing to prove its resilience and looks set to continue its upward rise in popularity. Whilst we are not out of the woods yet, the existing imbalance between demand and supply will continue to support growth in the sector.

Peter Cosmetatos, CEO, CREFC Europe:

For lenders, the BTR sector is both challenging and alluring when compared to commercial development finance or the financing of residential property built for sale. Neither presales nor pre-lets can easily be used to de-risk a project, and a host of unfamiliar regulatory, practical and specialist operational considerations need to be taken into account when underwriting.

On the other hand, institutionally managed residential rental property has long been a mainstream part of the commercial real estate investment market both in North America and continental Europe, and the UK needs the homes BTR can deliver. The pandemic has served to highlight BTR’s defensive characteristics in economically uncertain times that pose tricky structural questions for most other commercial real estate sectors.

Despite promising recent growth, BTR remains an emerging sector in the UK. It will take time to build up the kind of long-term, granular, local, comparative data that gives lenders (and investors) confidence. The legal and policy landscape continues to evolve, as does the scope for using precision-engineered offsite methods of construction.

An information hub for those businesses entering this market has a key role to play in sharing knowledge and developing standards, so the sector can fulfil its potential.

Dave Butler, CEO, UKAA:

Over the last six months the BTR sector has demonstrated its ability to create and sustain a sense of community,  “a feeling that one is part of a larger dependable and stable structure”  that has been so important to the health and wellbeing of residents and staff in troubled times. From supporting residents who are self-isolating to running virtual events that bring people together, the sector and the people who work in it have risen to the challenge of Covid.

The BTR hub is a very important step in developing a greater understanding of BTR and what it offers for stakeholders in and around the sector. The UKAA’s strategic objectives include developing best practice through sharing information and accordingly having everything accessible from one place is really helpful.

Ensuring that the resources and data behind the Hub is kept up-to-date is facilitated by the individual organisation and contributors having control of their own content and we are committed to making sure that these resources continue to grow  in scope and in richness.  The model of a thin top layer to the portal, providing access to potentially unlimited information is great.

You can visit the BTR Hub here. 

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