30 November 2017
Government must do more to support build-to-rent development, with the UK’s uptake of this nascent asset class set to grow exponentially in the next three years, new insight suggests.
Research commissioned with 100 UK housebuilders by law firm Gowling WLG highlighted a frustration with current legislation, with just 8% of respondents stating that Government policy on build-to-rent development is currently fit for purpose.
Cited as a major contributor to easing the UK's housing crisis by Sajid Javid in February's Housing White Paper, the boom in build-to-rent development is being driven by a fall in home ownership, which is at its lowest level in over thirty years, and an increase in demand for quality private rental properties across the board, including families and retirees.
Housebuilders are geared to embrace these market changes, and 87% of those surveyed anticipate an uplift in build-to-rent development over the next three years. However, delivering upon these ambitions while remaining on schedule and achieving commercial return is a challenge. Since the Brexit vote, three quarters (78%) of housebuilders have had to delay the delivery of a residential development due to a lack of viability, with almost half (46%) reporting severe delays.
Vicky Fowler, planning partner at Gowling WLG said: "While it's heartening to see the UK housebuilding industry gearing up to meet market demand for build-to-rent development, good intentions are not enough to get these essential projects off the ground. Government must take action to ensure these schemes are feasible, viable and supported within the planning system."
Industry players are keen for increased government intervention to update the current planning system to one that reflects the housing needs of a modern Britain - meaning a smoother route to build-to-rent development. Over two thirds (70%) of housebuilders would like build-to-rent schemes to be assessed as part of affordable housing quotas - a move alluded to in a Government consultation published this August but not, as of yet, enshrined in UK law.
The second most popular request from the UK housebuilding industry was the introduction of build-to-rent quotas for local authorities, a move which would encourage a truly holistic analysis of regional housing need, supported by over half (55%) of respondents.
Vicky Fowler adds:
"No longer merely perceived as a short-term solution for city dwellers or young couples, build-to-rent development has the potential to rejuvenate the UK housebuilding industry, attracting investment and fulfilling the evolving housing needs of a modern Britain - if Government will enable it to. Eliminating historic biases in the planning system and quickening the route to development is essential if supply is to close the gap with demand.
"By offering a long-term, low-risk investment profile with steady returns, build-to-rent development is attracting funds that would not otherwise be invested into residential schemes. While government is making the right noises and alluding to changes, it is vital that these are implemented as part of the updated National Planning Policy Framework, anticipated for Spring 2018. Any further delays could prove fatal for our already stretched system and lead to well-laid build-to-rent plans being abandoned due to a lack of viability."
For a full overview of the research conducted with UK housebuilders, including attitudes towards build-to-rent development an overview of market challenges and the future of the industry, read Gowling WLG - Planning 2020.