Build-to-rent houses next big threat to private landlords
Knight Frank says that there has been a huge increase in single family house building amid surging renter demand and investor interest – and numbers could triple.
The single-family housing (SFH) rental market is booming and attracted nearly £2 billion in backing last year as investors piled into the build-to-rent sector, latest analysis from Knight Frank reveals.
Investment into SFH soared to a record £1.9 billion as investors acquired or funded the development of more than 6,200 rental houses – a fivefold increase compared to the £388 million committed in 2022.
INVESTMENT
In total, SFH investment accounted for over 40% of all build-to-rent investment in the UK during 2023, with the remainder targeting multifamily apartment schemes and co-living.
And investors currently active in the SFH space plan to commit £17 billion of capital to the SFH sector over the next five years.
Knight Frank’s 2024 Single Family Housing Report says this could translate to the delivery of over 60,000 new SFH rental homes at current valuations – tripling the number of existing units.
Although still a fledgling market Knight Frank says it has the potential to play a pivotal role in bolstering housing supply across the UK.
Jack Hutchinson, Partner in the Residential Investment team at Knight Frank, says: “Despite an improving sales market forecasted, we fully expect this trend in increased investment volumes to continue into 2024 and beyond, thanks to a growing weight of capital attract to the sector by its strong fundamentals.
“In addition, developers and housebuilders are becoming more comfortable with the concept of incorporating single family housing into their wider sales and marketing strategies, which is helping to accelerate delivery of much needed housing.”
And Oliver Knight, Head of Residential Development Research at Knight Frank, adds: “Our research provides clear evidence of the opportunities for single family rental housing to play a key role in addressing the UK’s housing shortage.
“The geographic distribution of the sector is broadening as institutional investors increasingly eye suburban markets across regions like the East of England and West Midlands to deploy capital at scale.”
