The 'Build to Rent' (BTR) sector is one of the fastest growing real estate asset classes in the UK. It has been quoted that a further 1.1 million households will be renting privately in the UK in the next five years and the value of the sector is expected to rise from £15 billion to over £50 billion by 2020.

There is significant institutional money ready to be deployed but have we seen the sector grow at the speed that many were expecting? It appears not, but why?

One reason is the lack of available land for the BTR sector. BTR developers cannot compete with the 'Build to Sell' (BTS) developers as land value appraisals for BTR developers are naturally lower compared to the BTS developers. BTR developers will realise value over a much longer period of time through the rents paid by the residents whereas the BTS developers, on the other hand, receive a large capital sum on or shortly after practical completion so they can be more aggressive with their land value appraisals. What can be done to help improve the situation? We have four possible suggestions:

(1) Rethinking the relationship between BTR and affordable housing to ensure viability and proper recognition of the differences between BTR and BTS in terms of construction, funding, income streams and ownership models but without prescribing a one-size-fits-all solution.

(2) Lobbying the Mayor, Local Government and Central Government to better understand the industry and how it can make a significant contribution to the housing crisis. We need to highlight all of the benefits of the BTR sector being, in no particular order: housing quality (due to the long term vision of BTR developers); speed of delivery; and the place making and community benefits of large BTR schemes (which speaks to the Government's ambitions to champion health and wellbeing). We should also increase our efforts in marketing to the public the benefit of a new rental product.

(3) As mentioned in the previous edition of Property Shapers, we should release public land for specific BTR projects, allowing public bodies to collaborate and work with the industry to drive it forward. It could also require every site released to be subject to a long term covenant for use as BTR.

(4) The Government may consider certain incentives for the sector, including (by way of example) removing the additional 3% SDLT charge.

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