This blog from a Property team member summarises the Build to Rent scheme, touching on the recent government Housing White Paper, Brexit, lenders and the outlook for Manchester.
Housing White Paper
The Housing White Paper, released earlier this month demonstrates the Government’s enthusiasm for Build to Rent (BTR) schemes, unveiling a range of measures designed to encourage growth and investment within the sector. This is perhaps unsurprising given the potential of the PRS to alleviate the country’s ever growing housing crisis. A lack of new housing stock has plagued the property market in recent years, and with house prices on the rise, PwC estimate that by 2025 just 26% of 20-39 year olds will own their own home.
Unaffordable and Limited Housing Stock
As home ownership becomes increasingly unaffordable, the demand for high quality, purpose built rented accommodation is on the increase, especially in London where a property purchase can be little more than a pipe dream for graduates and young professionals. The demand for rental property is also strong in Manchester. The city boasts the highest retention rate of students following graduation from its two Universities, fuelling the BTR sectors central target market; young professionals. It is now estimated that half of all planning consents granted by Manchester City Council are for BTR schemes as the city becomes an early leader in this first wave of BTR.
The advent of Brexit has also attracted foreign investment to the UK’s PRS, with US and European investors looking to emulate the success of long established ‘multifamily’ real estate. A number of fund managers have also become increasingly “bullish” post Brexit. Currently the big investors include Legal and General and M&G. Around £15bn has already been invested in the BTR Sector, with Knight Frank estimating that this will grow to nearer £50bn by 2020.
Lenders are also becoming progressively receptive to opportunities within the BTR sector and are demonstrating a willingness to back innovative projects aimed at providing affordable and sustainable housing. For example, HSBC and RBS have jointly agreed a £60m Loan facility to fund Creekside Wharf, the UKs first BTR scheme to utilize modular construction.
To find out more about the issues raised in this post, or to discuss any queries regarding Build to Rent please get in touch with our Property team on email@example.com or call +44 (0) 161 829 2599.
The information and opinions contained in this article are not intended to be comprehensive, nor to provide legal advice. No responsibility for its accuracy or correctness is assumed by berg or any of its partners or employees. Professional legal advice should be obtained before taking, or refraining from taking, any action as a result of this article.