Investors All Set to Get Involved in UK Build-to-Rent Sector
Following on from recent news that the Government plans to inject £45m into the building of over 2,000 rental properties in Manchester, Leeds and Birmingham, real estate investors and developers are gearing up for the opportunity to invest in UK build-to-rent.
As we move into 2017, investors are showing strong support for the development of large scale private rental communities to house a growing number of UK tenants. As the prices of property continue to rise, the rental sector is growing at an unprecedented rate. As such, it has never been more important for the UK to invest in building new homes.
Despite the economic uncertainty raised by Brexit, ahead of the official triggering of Article 50 expected in March 2017, investor confidence remains strong. A recent report from JLL (one of the UK’s leading real estate services firms), declares that investors are looking for the security offered by residential rent income, not just in the capital, but across the UK’s regional cities.
JLL’s Head of Investment for UK Residential Capital Markets, Simon Scott, identifies the major metropolitan centres of both London and Manchester, as the ultimate targets for the Build-to-Rent sector. Nonetheless, he emphasises the opportunities offered in other, less mainstream locations across the country.
As the demand for rental property continues to rise, investors also seek to improve yield positions. As JLL’s Head of Residential Research, Adam Challis has identified, these yields are more readily available beyond southern England.
Recent reports indicate that there is more than £30bn ‘pent-up’ demand across the rental sector, though this number – according to some commentators – could actually be considerably higher.
UK Build-to-Rent May Help Solve Housing Crisis
Another reason why brand new housing is becoming even more necessary, is because of the lack of properties coming to the market: “The disconnect is the limited new supply coming to the market, and the lack of existing product. As a result, we expect to see development and investment activity growing substantially over the short to medium term,” explains Scott.
When it comes to investment, the real attraction of residential investment is the diversity of products available. This means more variety to suit a range of risk and reward appetites.
Scott also stated “There is a structural shortage of residential accommodation in the market, and ever growing demand pressures, so the positives significantly outweigh any perceived risks.”
Of course, it’s important to note that, although all signs are very positive, your capital is still at risk when you invest.
We always recommend you create a diversified investment portfolio as a way to mitigate risk, and to never invest more than you can afford to lose. Policy support from planning authorities and politicians is certain to aid development of new stock – perhaps the most important ingredient towards creating a flourishing sector.
UK Build-to-Rent Homes Are The Future
Though innovation and expansion are a definite, there will also be some mistakes to learn from before the sector matures. Nonetheless, with the unwavering support from the Government, we can expect to see a substantial rise in the number of quality UK build-to-rent homes.