Build to Rent is a sector that I had always been hesitant to champion. As a Millennial who scrimped and saved for 15 years to get on the housing ladder, it is natural to feel sympathy for Generation Z, sometimes referred to as ‘generation rent’. As their rents rise again, the prospect of home ownership will feel less and less attainable to them. The answer had always seemed very simple to me: Building more rental properties was a capitulation to the housing crisis, and we should be fixing the problem by building homes that people can buy. However, this oversimplifies a complex situation. 

The reality is that developers and investors are not led by such sentiments, they are led by demand. As much as we would all prefer affordable homes to be built and sold to young families, many are facing significant barriers to home-ownership. The upshot of the housing crisis is that we have 600,000 more renters than we did 10 years ago, and they are renting for longer. These people need somewhere to live, and they are choosing higher-spec rental options. Luckily for developers and investors alike, these are more lucrative than affordable housing.

Knight Frank has revealed the results of their latest survey of investors in the Living Sector. These are certainly worth examining but in summary, investors are increasingly focused on the Build to Rent sector. Within this area Single Family Housing is drawing the most focus, with 71% of respondents planning to have invested in the area by 2029. Interestingly, the increased focus on Single Family Housing has meant that houses and not flats are now the dominant residential rental type. This again reflects a new normal. Whereas previously most couples sought the security of buying a property together prior having to children, couples are increasingly renting their family homes. 

It is a similar story in the Co-Living rental subsector, which last year drew the second most investment it ever has. It is always good to have different options in the housing market, and clearly Co-Living appeals to young singles eager to form connections and friendships while trying to establish themselves in our ever more expensive cities. That a studio flat is out of reach for working adults is not a healthy reflection of the state of our property market; but what gets built is what the market requires at that moment. 

Developers are not charities, so unless the government can provide greater incentives to build more affordable homes for sale, then not very much of it will be built. Beating the housing crisis means building, and building rental homes is certainly better than nothing. More rental properties in the market should have the effect of slowing the acceleration of rental prices and act as a pressure valve on house prices. This should hopefully allow renters to keep more of their salary in their pockets, and in time this can help Gen Z enter the housing market in greater numbers. 

I therefore find myself increasingly optimistic about the potential of the Build to Rent sector. If we aren’t getting enough affordable housing built, then let’s get building to rent.