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The proportion of London’s population renting in the private sector is set to grow from 27% currently to more than 40%, according to a new report from London First.
The report, Everything You Need To Know About Build To Rent In London, outlined how, given the mixed quality of accommodation available to private renters, there is a big opportunity for the build-to-rent sector to profitably capture this growth in the number of people renting.
A bit of simple maths shows how big the opportunity is for the BTR sector. There are about 3.5 million households in London, according to the Greater London Authority. If the number of households in the private rented sector is growing from 27% to 40%, then that is a rise from 945,000 households renting to 1.4 million households.
But according to the British Property Federation, there are 57,000 BTR units under construction or in planning, just a tiny fraction of those that could be built to accommodate the growth in the number of renters.
The mayor’s London Plan states that the capital needs to build 65,000 new homes of all types per year, which is more than double what is currently being delivered.
According to CBRE, there is around £34B of capital currently targeting the UK BTR sector.
Challenges that need to be overcome to help BTR grow include the slightly ambiguous planning status of BTR in London, particularly in terms of how it provides affordable housing, according to the report.
“London is becoming a city of proud private renters once again,” said Councillor Darren Rodwell, London Councils’ executive member for Housing & Planning.
“It’s clear that all levels of government need to support a greater diversity of the types of homes that are built in the capital, which will contribute to increasing overall supply.
“This joint research highlights the opportunities for delivering high-quality build-to-rent developments for Londoners, and boroughs are keen to help make this happen. Increasing delivery of build-to-rent housing is a vital part of addressing London’s ongoing housing crisis.”
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