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Build to Rent New Supply - Hype or Reality?

Peter Hemple reports

The latest figures provided by the British Property Federation (BPF) have revealed that the build to rent sector has now eclipsed its 100,000 unit milestone. However, this figure represents the number of homes that are either completed, under construction or in a planning stage and as the figures below show, it will be quite a while before we reach 100,000 actual completions in the build to rent sector.

The most recent estimates from the BPF (end of Q4 2017) revealed that:

  • There are 105,214 build to rent units either completed or planned across the UK, including 19,106 completed, 27,566 under construction, and a further 58,542 with planning permission.
  • In London, there are a total of 59,271 units
  • Outside London, there are 45,943 units.

However, as always the devil is in the detail and of the 58,542 with planning permission, only around half of them have achieved ‘detailed permission’, while the remaining 29,000 are split in half between the ‘detailed application’ stage (14-15,000) with an equal amount consisting of ‘outline permission’, ‘outline application’ and ‘pre-planning application’.

While the number of build to rent units actually being completed is growing at a healthy clip, it is starting from a very low base. Even if the number being produced continues to increase by around 50% per year, the total amount of build to rent apartments is unlikely to reach 100,000 units until 2021. At that growth rate the sector would complete around 15,000 units this year, 20-25,000 in 2019, 30-35,000 in 2020 and then around 45,000 units in 2021.

Private landlords that plan to stay in the PRS for many years to come, that hopefully have low enough debt levels to allow each of their properties to ‘wash its face’ despite the ‘tax on turnover’ that Government has allocated specifically for them and to no other industries, can rest assured that the number of landlords that will exit the industry between 2016 and 2021 (because of the withdrawal of mortgage tax relief, and because of the ever rising stack of paperwork involved, and because some are highly leveraged) will very likely exceed 100,000.

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