Head to Head: Savills vs Home Made

One of my last major projects in 2017 at my last employer was to lead the marketing launch of the biggest Build to Rent (BTR) developments in the North West that year, 324 units in the Baltic Triangle, called the Cargo Building.

Before this, I’d heard of BTR, but not grasped how institutional investment made the concept so different to traditional private sector rentals and how the lifestyle element of such developments can really capture a need and imagination of potential residents (they aren’t called tenants in the BTR world).

It’s been commented recently that as many as nearly four in ten British adults expect that either they and/or their children will be living in rented accommodation in ten years’ time. Already, nearly 30% of the UK population lives in private rented accommodation.

By 2025, this figure is projected to overtake owner-occupiers for the first time and a recent poll by Deltapoll found that nearly four in ten British adults expect that either they and/or their children will be living in rented accommodation in ten years’ time.

Because of this, there have been calls by many senior figures in the property sector for the prime minister to appoint a Minister for Renting.

Since my involvement in the BTR sector, I’ve kept watch on the market and so this month, I’ve looked at two recent stories published by Savills and Home Made that look at the rental and BTR sectors.

The Savills story was focused around analysis by Savills for industry trade body the British Property Federation (BPF), which found the number of Build to Rent (BTR) homes has increased, with 150,000 BTR homes in planning, under construction or completed.

There has also been a 51% surge in the number of completed US-style rental homes in key regional cities, with Manchester, Birmingham Liverpool, Leeds, Glasgow and Sheffield leading the way.

Without repeating the whole story, the stats represent an increase of 15% over last year.

Manchester and Salford lead the way whilst Birmingham meanwhile nearly doubled its pipeline with Leeds, Liverpool, Glasgow and Sheffield all seeing an increase in BTR activity too.

Interestingly Liverpool doesn’t feature in the story and I know we were already worried back in 2017 that the City was at saturation point and so I suspect that’s part if the reason growth on BTR doesn’t compare with the other cities mentioned.

The next story from Home Made looks at the issue that as landlords leave the sector, rents will undoubtedly rise and they forecast a rise of between 3%-5%. They suggest that landlords look to take advantage of the potential upcoming drop in mortgage rates for future investments. This is great news for mortgage broker potentially and the advent of such tools like Lendlord, for example, can only assist in helping landlords and brokers ensure their portfolio is on the lowest mortgage rates.

They also state that they expect to see gross yields increasing, but operating profit margins going down and say that in this climate landlords need to control their costs and make sure they’re not paying through the nose for agency fees.

This month, the news from Savills slightly edges it and I hope that we are on a cusp of increased activity in BTR to provide more choice to the significant proportion of the population who decide, choose or have to rent.