Addressing the UK’s Housing Crisis: The Growing Demand for Build-to-Rent Homes
UK rental market sees record rise in rents, leading to calls for more build-to-rent homes
The UK rental market witnessed a record increase in rents last month, with average monthly rents rising by 9.2% to £1,200, exacerbating the country’s housing crisis. Experts are now calling for the construction of between 30,000 and 50,000 build-to-rent homes annually to meet the growing demand and to boost productivity.
According to industry professionals, there is a pressing need for more flexible accommodation options that allow people to move around freely and engage productively with employers. James Stevens, head of real estate investment at Aviva Investors, highlighted the historically low standard of living in residential accommodation in the UK and emphasized the importance of improving the quality of available rental properties.
Pension funds are increasingly turning towards investments in the rental sector, moving away from traditional real estate assets like shopping centers that were hit hard during the pandemic. Aviva Investors, for instance, has significantly increased its allocation to residential property in recent years and is planning to further expand its investments in build-to-rent projects.
While total investment in the build-to-rent sector dipped slightly last year due to factors such as high interest rates and construction costs, there has been a significant rise in investment in family-focused rental properties. This trend is expected to continue, with experts forecasting exponential growth in institutional investments in build-to-rent homes over the next five years.
Chris Norris, Policy Director for the National Residential Landlords Association, emphasized the importance of increasing housing supply to meet growing demand. While build-to-rent schemes are seen as part of the solution, Norris stressed the need for a balanced approach that also includes traditional buy-to-let properties.
Overall, the rental market in the UK is undergoing significant changes, with a shift towards higher-quality, purpose-built rental properties. As demand continues to outstrip supply, addressing the housing crisis remains a key priority for policymakers and industry professionals alike.
