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 show a total number of units either complete, under construction or with planning standing at 148,046, London has maintained the majority gain of BTR homes with approximately 75,747 in London and 68,419 in the regions.

It is fair to say that there has been a slowdown in the number of units under construction since the last quarter as schemes complete but a smaller number commencing works.

Recent BTR activity of note includes: M&G announcing schemes in Sutton and Bournemouth with combined pricing of £93.4M comprising a total of 324 units. Both will be delivered by Watkin Jones. Grainger Plc agreed to forward fund a 215 unit development in Holbeck, Leeds with developer Oakapple Group. Allsop represented the developer on the transaction. Grainger also agreed purchases of Well Meadow in Sheffield and Millwrights Place in Bristol comprising another 515 units. Sigma Capital has moved into the London BTR market with the acquisition of two sites in Havering and Barking.

The sector has proved robust to wider economic and political uncertainty when compared with other asset classes, with focus more on the development risk rather than long term investment concerns. Most investor strategies are long term and although do take into account the short term volatility, longer term projections remain compelling.

BTR housing continues to emerge as more specialists in the developer/contractor space are attracted to the model. Major masterplan projects see the addition of a BTR element as an attractive diversification alongside the traditional private for sale schemes. Allsop has two such developments which are at varying stages of the planning process. A sale of one in the east of England comprising 246 units has been agreed with an investor and the other, located in the north west and totaling 413 units is currently in the market.

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.

Allsop Lettings and Management has recently launched Moorfield’s third build to rent scheme; Duet in Salford comprises 270 units, adding to the management of The Trilogy, which was recently named by residents as one of the best places to live according to Homeviews’ independent survey. The Forge in Newcastle, Moorfield’s first BTR development, continues to perform well, nearing stabilisation.

Sam Verity

DL +44 (0)20 7344 2693