The Build to Rent Market

There are now an increasing number of authentic BTR developments which have completed or are nearing completion. Moda’s ‘Angel Gardens’ development in Manchester and L&G’s ‘Spring Wharf’ in Bath have both launched within the last two to three months. The British Property Federation’s (BPF) latest figures demonstrate this shift into the construction phase, estimating an impressive 30,357 units completed and 37,549 under construction. London has maintained the majority gain of BTR homes this quarter with approximately 73,974 and 66,116 in the regions; schemes in the regions outnumbered London this time last year.


Recent BTR announcements worthy of mention include: Telford Homes has agreed terms on a £280M design and build contract with Henderson Park and Greystar to build 894 BTR homes in Nine Elms, Battersea; L&G has agreed to forward fund Skyliner; S1’s 338 BTR development in Edinburgh; Goldman Sachs has entered the UK BTR market by providing a four and a half year £118M debt facility to Apache Capital Partners and Moda Living’s The Mercian, a 42-storey tower on Broad Street, Birmingham; Platform_ has acquired a site two miles north of Edinburgh city centre for a BTR development and will be submitting a new application on the site to increase the density from the current planning of 220 apartments; Apache and Moda have also partnered with North Star Investment Management to develop a £200M residential scheme of a former gasworks site in York. 450 of the 710 homes will be BTR dwellings, owned and operated by Moda alongside 20,000 sq ft of amenity space.


The appetite for Scotland has increased throughout 2019, buoyed by the acquisitions from Platform_ and L&G mentioned above. Investors are now looking to deploy capital in Scotland alongside well-connected large towns, seen as growing locations outside of the core major cities. Experience from other stabilised schemes is providing the confidence that security of income can be achieved in some secondary areas, stronger yields are helping to improve viability, as well as research showing an average premium of over 9% when compared to BTL market rents. Investors are becoming more comfortable with investment pricing being closer to hypothetical sales values which is an important factor in making it possible for BTR to work in towns and cities with sales values of less than £300 psf.


The BTR housing market continues to grow; we are starting to see a small number of contiguous schemes alongside the opportunity to acquire a portion of units from larger developments, usually delivered by a housebuilder. Hearthstone has recently acquired 100 BTR homes having committed £31M across three transactions in Manchester, Nottinghamshire, the Midlands and Southern England.


Pricing remains difficult in these areas and although we are now seeing some incremental stabilised asset transactions, factors such as design, layout, management, and amenity space can only be considered on a case

Yields remain strong for well-designed BTR stock in prime, practical locations; in London and strong south east locations, NIYs range from 3.25% to 4.00%, with a number of major regional centres at 4% to 4.5%. Secondary locations are seeing closer to 4.75% to 5.25% NIY. Pricing remains difficult in these areas and although we are now seeing some incremental stabilised asset transactions, factors such as design, layout, management, and amenity space can only be considered on a case by case basis, which makes comparisons challenging.


Allsop Lettings and Management has launched Moorfield’s second BTR development: The Trilogy, Manchester. 64% of the 232 units have now been let, with 32% having been pre-let. The Forge in Newcastle, Moorfield’s first BTR development, continues to perform well with 53% let over three phases, the third phase having just been released. The Duet, Moorfield’s third BTR development, located in Salford is due for completion in October and will be released to the market in mid-July.


Sam Verity

DL +44 (0)20 7344 2693

sam.verity@allsop.co.uk