Business LDN reflects on their latest report on the build-to-rent market.

London faces a chronic shortage of housing. The capital needs 66,000 homes per year to meet demand and whilst this news is nothing new, the systemic challenges that have contributed to years of undersupply are being further exacerbated by a challenging fiscal and regulatory environment. No one tenure can fix the problem. London has a diverse population, and so the solution must mirror this. 

Build-to-Rent – high-quality, professionally managed homes designed specifically for private rent - are now an integral part of London’s housing ecosystem and represents around 10% of all of the capital’s private rental housing. Yet, the sector still feels very much like a venture into the unknown with many still regarding Build-to-Rent with a healthy degree of scepticism, believing that such developments are a luxury product only accessible to a wealthy few. 

Our report ‘Who lives in Build-to-Rent’, created in partnership with the BPF and UKAA aims to dispel this myth. First published in 2020, the report benchmarks Build-to-Rent residents against a profile of wider private rented sector residents provided by research consultatncy Dataloft. The data covers 17,722 residents living in 10,488 homes across 31 schemes in London and shows that Build-to-Rent is providing good quality and affordable homes for all Londoners.

Despite this, London’s Build-to-Rent pipeline is lagging behind that of the regions. Our report found that London has only seen a 6% increase in development from Q1 2022 to Q1 2023 compared to 12% in the regions during the same period. Constraints on availability of land, a convoluted planning system and new regulations around second staircases in tall buildings are being further compounded by rising development costs and the sector must now look beyond the traditional investment models of forward funding and forward sale arrangements if it is to continue to grow in London.    

However it evolves, and evolve it will, one thing is certain, Build-to-Rent is not a leap into the unknown. It provides a lifestyle choice for those who choose to rent or as a stepping stone before buying, helping to create communities, a sense of place and, above all else, providing the homes that Londoners need.