Latest commercial property news from Lambert Smith Hampton

Government urged to change planning policy in order to stimulate Build to Rent development

Following the release of our latest report, ‘Build to Rent: Reaching out to the Regions’, we are calling for the Government to support changes to planning policy for this emerging property asset class, so as to meet growing demand in the UK regions.

The rapid growth in popularity of Build to Rent (BtR) has led to it increasingly being recognised as a separate asset class in its own right by investors and developers. Despite this, investment activity into BtR is currently limited – we estimate that, for every pound invested in BtR to date, another eight pounds will be deployed by 2020; a predicted 800 per cent increase over just five years.  

Roughly two thirds of all BtR units delivered to date have been located in London. However, notably higher entry yields in the regions, less competition over sites and fundamentally more confidence that rents will grow steadily in line with income growth are providing the stimulus for investors and developers to target opportunities beyond the capital.

In order to capture the scale of the demand outside of London, we have analysed various metrics, including affordability constraints, population density and projected economic growth (among others), to identify the top 15 regional development hotspots for BtR. They are:

  1. Brighton and Hove
  2. Oxford
  3. Reading
  4. Cambridge
  5. Bristol
  6. Southampton
  7. Manchester
  8. Slough
  9. Bournemouth
  10. Edinburgh
  11. Cardiff
  12. Guildford
  13. Watford
  14. Bath and North East Somerset
  15. Aberdeen

Oliver du Sautoy, Head of Research at LSH, said: “What’s interesting is that, while the top 15 are unsurprisingly dominated by locations in the South East and East regions, there is a notable disconnect between those and the forthcoming supply. In particular, Brighton - which tops the list – is yet to see a single BtR scheme either completed or in the pipeline.”

LSH believes the disconnect lies with local planning policy and suggests that the Government has a key role to play in allocating sufficient sites for the development of BtR in order to meet this burgeoning demand. By recognising BtR as in its own class, rather than categorising it with more traditional residential developments, would be one means by which more potential sites could be unlocked for development and allowing reduced planning obligations for these kind of schemes. 

Discounted Market Rent could also be the right approach for some BtR schemes, easing pressure in the market, through developers providing affordable housing directly to renters, and in doing so stimulating activity in the regions, which are growing in popularity.

Helen Marks, Director Planning and Development at LSH, said: “We are in no doubt that there is room for significant changes to be made to planning policy to recognise the BtR sector, which would have a noticeably positive effect on supply of BtR homes keeping up with demand.

“We therefore urge the Government to rethink national policy to encourage local planning authorities to pave the way for BtR development where there is an identifiable need, and in doing so ensure that supply in the regions can keep up with the insatiable demand for this residential class.”   

To request a copy of the report, please click here

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Contact us now

Helen Marks
Director - Planning & Development Consultancy

0191 338 8296

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