Is this the only way to drive PRS growth?

Figures from the British Property Federation show 69,083 build-to-rent units completed, under construction, or with planning permission in the UK, up an incredible 200% from last year. After years of trying to attract institutional investment into the sector, build to rent is now firmly on the map. Pension funds, insurance companies and institutional investors, from within the UK and outside, have moved into the sector, seeing the value of ever-growing demand for privately rented homes. Backed by institutional investment, the large-scale, eye-catching, shiny new sites in the capital and major cities are rightly generating huge interest and acres of press coverage. As an industry, we might have been talking about build-to-rent for what seems like forever, but for consumers, these schemes are new, different, and provide the high-quality, well-managed homes that many – particularly young professionals – want, and are now beginning to expect. At Touchstone, and alongside our parent company Places for People, we’re involved with many of these large-scale projects across the UK. The schemes are clearly a crucial part of the private rented sector – not only providing homes, but also raising the profile of the sector. However, despite the rapid growth of build to rent, these schemes still represent only a small fraction of the market as a whole. And while they cater perfectly for a young professional or a student, not all of them can or will be appropriate for all sections of the market. The Royal Institution of Chartered Surveyors suggest that by 2025 we’ll face a housing shortfall of 1.8m homes in the private rented sector unless something is done now. Added to this, migration patterns are changing, with increasing numbers moving away from major cities like London and looking for homes in other parts of the UK that will suit their needs. We are all agreed on just how crucial build-to-rent is, but it is worth noting that if we are to create a private rented sector that fulfils demand, well-managed, high-quality homes can’t purely be about new builds or flats. We’re also seeing a lot of interest from clients and investors looking at portfolios made up of existing types of property across the UK’s regions and towns. The key is ensuring this stock is up-to-date and well-managed. The build-to-rent model, setting the example of one single landlord and longer tenancies, is increasingly being called upon to be recreated for portfolios of existing stock. I believe large-scale build to rent is hugely important, but I don’t think it can be the only way to meet demand in the private rented sector. Smaller projects also play their part, particularly outside of London and into the regions. BPF figures show the rate of growth between London and the regions is almost even, with 33,443 build-to-rent units in London, and 35,640 in the rest of the UK. We are seeing big investors also looking at more disparate build-to-rent portfolios, acquiring a number of smaller sites across the UK. These developments are valuable because they can enable wider mixed-use, mixed-tenure schemes. They’ll involve houses as well as flats, so as to cater for families, and once built they’ll provide quality housing and security of tenure. Take our involvement in the multi-party arrangement of Matrix Homes developments. Manchester City Council partnered with the Greater Manchester Pension Fund, the Homes & Communities Agency and Places for People to convert small parcels of unused land into 119 rented homes. These types of multi-party risk-sharing arrangements make new developments possible and help to meet the city’s housing needs, as well as having a positive effect on the local area by utilising redundant and run-down land. It’s a model that we’d like to see recreated across the UK, to help drive growth and meet the demands of a growing private rented sector. The private rented sector isn’t one size fits all, and to fully meet demand, it is important that the market reflects this. John Midgley is managing director of Touchstone