BTR Sector More Affordable Than PRS
As a new 440-unit Build-to-Rent (BTR) development is announced, a separate study has found that amid claims by some that the sector is expensive for renters, it is actually more affordable than the Private Rental Sector (PRS). While the BTR segment remains relatively niche with the majority of the developments available in just 20 English cities, on a rent-to-income basis, it is considered affordable by certain standards set by the Office for National Statistics.
With that in mind, it’s likely the latest announcement of a new BTR development will be welcomed by many. The 440-unit project is agreed for Birmingham and is expected to be completed by 2024. This will provide much needed new rental accommodation in the city and at an affordable level, if the latest research is borne out in the future.
BTR Calculated as Affordable
In the second annual study of England’s BTR sector, the British Property Federation (BPF) has analysed over 20,000 residents in more than 15,000 BTR homes across the country. The findings might come as a surprise to some as they include:
- On average BTR residents spend less of their monthly earnings on rent than people living in the PRS.
- One-in-five people living in BTR accommodation work in the public sector.
- The income of BTR residents is similar to that of those living in the PRS.
Specifically, the report shows that on average families living in BTR spend 30% of their income on the rent, compared with 33% in the PRS. For people living alone, in the BTR sector they spend an average of 32% of their income on rent compared with 33% in the PRS. Meanwhile, for couples, the dynamic shifts a little with 30% of income spent on rent in BTR homes compared with 29% in the PRS. This compares with the ONS’ affordability standard of spending 30% or less of income on rent.
With that positive report on the BTR market in mind, the announcement of a new development should be welcome news to many.
New 440-Unit BTR Development
In mid-November the acquisition of a new location for development was confirmed along with plans for 440 one and two-bedroom BTR apartments in Birmingham. The new rental homes will be housed in a 35-storey tower and low rise 6 storey block and will feature a gym, cinema room, lounges a co-working space and other shared amenities.
The new project undertaken by partners Harrison Street and Cortland and called Cortland Broad Street, is set to be completed in 2024. It will deliver much needed homes in one of the twenty cities in England identified by the government as in need of more housing provision.
The confirmation of the purchase and plans also ensures the developers involved are now among the top ten residential rental managers in the UK. That bodes well for the future of the BTR sector for investors and tenants. Indeed, Harrison Street states that the continued investment into Birmingham was among the details that attracted it to the agreement. That suggests that provided infrastructure investment continues, then more BTR businesses will look to capitalise on that and add further BTR developments to their pipeline.
The continued growth of the BTR sector is something that will help bring more homes to people living in England and around the UK at a time when they are still sorely needed. In addition, with average rents in many considered affordable, newly minted developments with up-to-date facilities will likely attract an increasingly broad-base of tenants.