COMMENT It has been more than a decade since the build-to-rent sector first made its mark on the UK real estate market. Since then it has gone from strength to strength, responding to the need for more rental homes across more price points and providing higher-quality, well-managed stock. We have now seen the delivery of 100,000 BTR homes, and a staggering £35bn of investment by developers and institutions.
But not all schemes are the same. Each varies by size, age and price point. Design quality also varies widely, and those offering superior management and facilities can command higher rents, given they tend to be “all-inclusive”. Typically, these schemes feature well-designed communal spaces that foster a sense of community, welcoming ground-floor lobbies, concierge services and amenities such as gyms and communal lounges. Rooftop gardens and co-working spaces are also increasingly common.
Smart design is essential. A primary focus is on the layout of communal areas to maximise usable space and ensure ease of maintenance. Some buildings house upwards of 1,000 residents, so easy access to building infrastructure is key to help minimise costs and disruption.
As expectations for BTR design evolve, newer and higher-quality schemes are emerging. These “generation 2” developments offer superior management and a broader range of facilities compared with earlier builds. Investors are growing more confident, and recognise the economies of scale that larger schemes provide.
The rise of generation 2
The average generation 2 scheme comprises 340 apartments, compared with 187 in first-generation developments. This allows larger schemes to offer facilities such as rooftop running tracks, pet spas and keyless door entry systems. Access to these amenities is often included in the base rent, positioning these schemes at the higher end of local markets.
Apache Capital’s Angel Gardens in central Manchester was a trailblazer for this new generation. Delivered in 2020, the 466-flat scheme set a new benchmark, offering top-tier management and facilities such as a rooftop football pitch, a resident event schedule and a bookable personal trainer. Since then, 46 second-generation schemes have been delivered, continually raising the bar in their local markets.
Several investors have since followed suit, and the likes of Legal & General, Greystar, Get Living and Long Harbour have each set new standards of renting in their markets, with second-generation schemes stretching all the way from Brighton to Glasgow.
Shifting priorities
Convenience is crucial for today’s renters, a theme that has shaped the gen2 BTR product. The quality of management is a significant focus, becoming a clear selling point for the sector. As a result, the resident experience is now at the forefront of investors’ priorities. Consumer awareness of professionally managed rental homes is also increasing, with renters better able to distinguish between new-builds let by traditional agents or landlords and those operated by institutional landlords.
Investor confidence is strong in key markets such as London, Manchester, Birmingham and Leeds, which have demonstrated robust rental demand. Schemes in these locations have experienced strong lease-up rates and consistent occupancy, indicating high demand for well-managed properties with a wide range of facilities.
The past decade has been eventful and successful for the BTR sector. Schemes are being delivered across a range of locations and price points, as the list of active investors in the market has grown. The next generation of developments will continue to push boundaries, responding directly to the needs and wants of UK renters. As more schemes come to fruition, the market is poised to continue attracting both investors and tenants alike.
Guy Whittaker is head of UK BTR research at Savills
