BPF National Residential Investment Conference 2019
With Brexit dominating discussions and a politically uncertain next few months ahead, the overriding view at the conference was that the UK BTR market as an emerging sector is here to stay and will continue to grow, regardless of the outcome of Brexit.
Whilst house prices and demand for open market sale stock were at more risk of a no deal Brexit, the BTR market’s key component to ensure success is affordability of rents which are less volatile.
The Housing crisis continues and whilst the number of new homes being built is now at 222,000/yr, this still falls short of the 300,000 homes needed. The Rt Hon Sir Oliver Letwin highlighted in his report the issue of absorption rates being insufficient to drive increased production to meet these targets but did recognise that having a larger percentage of BTR on a site greatly helps increase absorption rates. Land values and greatly increased prices following planning was also raised as a key factor in lack of affordable housing. As Rt Hon Tim Malthouse MP put it later, his recommendations were under consideration currently, but in the meantime, he was looking for the industry to put forward new ideas, new thinking and to step forward with a solution.
As part of this new thinking, modern methods of construction (MMC) with modular and offsite options were discussed with the concept of speeding up delivery of new homes and to a high quality in factory conditions. The concerns were raised around individuality of design and avoiding cooker cutter approach to design. A good system that allows for individuality and local vernacular is required. This in turn also helps create more desirable homes which helps build new communities.
Letting strategies and the concept of customer focused design for BTR continues to play an increasingly important part in the overall BTR model, and quite rightly so. Michael Allen of Tipi’s view is that leasing and product development needs to work together.
Family housing for rent was also widely recognised as a growing and important part of the solution to the housing crisis and affordability issues. Sigma saw the need for family houses to rent and created a product to start filling this gap. However, with the increasing number of families looking for good quality houses to rent, this demand is growing. Sites near schools, shops and amenities are key with easy access to either town centres or places of employment. With regards to affordable housing, quality homes to rent are increasingly more popular than affordable homes to buy.
Overall, affordability of housing is restricting home ownership, which is now in slow decline, but this in turn allows for a new professionally managed BTR sector to grow to provide a better-quality product and service than that which has been seen in the UK resi market so far. When this can be combined with efficient and tried and tested MMC, there will be a fantastic opportunity for speeding up housing delivery with affordable housing that suits occupiers.