London leads the way with Build to Rent, delivering twice as much as rest of country
The figures have been compiled by the British Property Federation (BPF), which has launched an interactive map [see above ]tracking Build to Rent development in the UK. It shows that there are at least 3,404 completed units in London, compared to 240 in the rest of the UK.
The organisation has published an accompanying manifesto for the Build to Rent sector, in which it urges government to follow the lead of the Greater London Authority (GLA), and change national planning policy to stress that the appropriate affordable housing on new Build to Rent developments should be discounted market rent. This helps development viability, but also allows the investor to manage the ‘affordable’ and ‘market rented’ elements as one, in a tenure-blind manner.
The BPF has long championed the role that Build to Rent has to play in expanding housing delivery, attracting long-term investment that has the potential to significantly boost housing supply.
Recent research has shown that Build to Rent can deliver homes at 2.5 times the speed of developments for sale, and that there is £10bn of firm commitments and as much as £30bn that the sector has ready to invest this Parliament [1]. The £10bn of investment identified for Build to Rent would create around £28bn of wider economic benefit.
Melanie Leech, chief executive of the British Property Federation, commented: “It has felt for a long time that Build to Rent has been on the cusp of becoming a sector in its own right. Today, we are proud to show that the sector has really taken off, and it is great to see how many fantastic projects are either underway or completed, and that residents have quality rented homes.
“There is more that can be done to encourage the sector to grow, however. The GLA has paved the way for Build to Rent, introducing both ambitious targets and supplementary planning guidance, and the map launched today shows that this has really paid off. Government has everything to gain from encouraging this sector, which will attract significant institutional investment into UK housing supply, deliver new homes quickly, and drive up standards in the private rented sector, and we hope to see it continue to support it.”
Andrew Stanford, residential fund manager at LaSalle Investment Management and chairman of the BPF’s Build to Rent Committee said: “The momentum behind Build to Rent continues. It is moving firmly beyond theory and into reality. With continued support from both national and local government this progress can continue. The growing number of long-term institutional investors in the sector will then find a suitable home for their capital, ensuring that housing supply and tenant choice can increase.”
[1] Mind the viability gap: Achieving more large-scale, build-to-rent housing, September 2015
Other recommendations in the manifesto include:
Plan for Build to Rent National policy should oblige local authorities to measure demand for market rented housing and to plan for that demand, allocating land in local plans for Build to Rent.
Promote better use of public land The Government should issue revised guidelines, which give greater comfort to councils that public sector land deals that might not generate the greatest instant profit, but provide an income stream, meet best value.
Reform the community infrastructure levy The Government is committed to reviewing CIL early in this Parliament. Local authorities should consider a separate rate for Build to Rent in their charging schedules, to reflect the sector's different viability to build-for-sale.
Reform VAT, which hits build to rent far harder than buy to let Rents do not incur VAT and therefore VAT on costs incurred by institutional investors has nothing to be offset against.
The 20% VAT paid on repairs and maintenance of Build to Rent property, however, eats into income and prevents investment.
Make REITs work for residential To date, REITs have almost solely been used for commercial property investment. Recognising this, successive Governments have made reforms to make REITs more residential-friendly, but have not completely removed all of the barriers.
Long-term stability Build to Rent investors will typically be looking to commit investment for at least a decade and therefore will weigh up the longer-term risks that might impact on their investments, including political risks.
Measures such as rent controls and long-term security of tenure drove institutions out of the sector in the 1960s and 1970s.
The Build to Rent map has plotted Build to Rent schemes across the UK aimed at the institutional investment market. If you have developed, or are developing, a Build to Rent scheme that is not plotted on the map, get in touch Phoebe Rountree
The Build to Rent map has plotted Build to Rent schemes across the UK aimed at the institutional investment market. If you have developed, or are developing, a Build to Rent scheme that is not plotted on the map, get in touch Phoebe Rountree
(prountree@bpf.org.uk) so we can include it.
GET IN TOUCH
LIZZIE LAMBERT Media
Manager llambert@bpf.org.uk @lizzlamb
020 7802 0113
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