# Could the surging build-to-rent market create emerging opportunities for investors?
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2022-05-19
Category: INVESTING
Category URL: https://financedigest.com/category/investing
Meta Title: The Rise of Suburban Rentals: A Shift in UK Property Trends
Meta Description: Discover how suburban families are reshaping the build-to-rent market, as housing costs soar and home ownership becomes more elusive for young adults in the UK.
URL: https://financedigest.com/could-the-surging-build-to-rent-market-create-emerging-opportunities-for-investorshtml

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![Tom Jansons, Development Manager, Jansons Property](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/jansons-professional-headshots-40-tomas-jansons1-1736815710538-compressed.jpg)

by Tom Jansons, Development Manager, Jansons Property

As a market typically characterised by providing expensive, urban flats for young adults, the build-to-rent sector is facing a landmark shift as suburban families became one of the fastest growing renter demographics in 2021.  The suburban rental sector is today an important part of UK housing delivery as we saw demand for rental homes increase by 43% based on a five year average, according to a 2021 UK Rental Market Report by [Zoopla](https://advantage.zpg.co.uk/insights/rental-market-report/). This comes as home ownership is becoming increasingly unaffordable for young people, which is an issue that has been bolstered in recent months with the cost-of-living crisis. Following the boom in house prices seen over the past two years, the average [property costed £24,000 more in October 2021 than the same month in the preceding year](https://www.financedigest.com/10-year-david-goliath-crusade-finally-sees-justice-for-off-plan-spanish-property-buyers.html "10 year ‘David & Goliath’ crusade finally sees justice for off-plan Spanish property buyers").

In a survey by [Nationwide Building Society](https://www.nationwidemediacentre.co.uk/news/home-truths-rising-cost-of-living-forces-first-time-buyers-to-put-plans-on-ice-for-now) taken in April, they found that 70% of prospective first time buyers, looking to buy in the next five years have delayed purchases by an average of nearly two years due to the cost pressures of saving for a deposit. And now with the recent decision by the [Bank of England to hike interest rates](https://www.financedigest.com/bank-of-england-officials-split-over-future-path-for-rates.html "Bank of England officials split over future path for rates") to 1%, first-time buyers (and many looking to re-mortgage) will find that new mortgage deals are going to be considerably more expensive. For homeowners that are already part way through fixed-rate deals, they will be sheltered from these rises, but this increase has made buying a first [home near impossible for many young](https://www.financedigest.com/to-be-a-young-person-and-own-your-own-home-should-be-a-dream-that-everyone-has-the-right-to-fulfil.html "“To be a young person and own your own home should be a dream that everyone has the right to fulfil.”") families. As a result, these factors have [created a growing opportunity for the build-to-rent sector](https://www.financedigest.com/new-healthcare-market-review-reveals-elderly-personal-care-sector-creating-exciting-investment-opportunities-and-defying-brexit.html "New Healthcare Market Review reveals elderly personal care sector creating exciting investment opportunities and defying Brexit").

**Current BTR** [market trends](https://www.financedigest.com/is-hybrid-the-latest-trend-for-the-multichannel-market-in-2017.html "Is Hybrid The Latest Trend For The Multichannel Market In 2017?")

Despite being introduced a decade ago, the [build to rent](https://www.financedigest.com/proper-pristine-pads-not-pods-tipi-dispels-the-myths-of-build-to-rent.html "PROPER, PRISTINE PADS, NOT PODS- TIPI DISPELS THE MYTHS OF BUILD TO RENT") market is in its infancy but it is showing signs of significantly growing in maturity as an asset class with recent trends. A quarterly [report from Zoopla published in February 2021 found that single-family houses rented 30% faster during the last](https://www.financedigest.com/the-last-mile-of-statutory-reporting-is-absolutely-crucial-heres-how-one-global-company-does-it-with-onesource.html "The last mile of statutory reporting is absolutely crucial. Here’s how one global company does it with ONESOURCE") quarter of 2020 compared to the previous year. And further research from a quarterly build to rent report produced by the [British Property Federation and Savills](https://www.alamy.com/stock-photo-royal-london-hospital-in-whitechapel-london-uk-123999285.html?pv=1&stamp=2&imageid=9C5E0839-C213-44C6-928F-3C1EEBF52B31&p=216171&n=0&orientation=0&pn=1&searchtype=0&IsFromSearch=1&srch=foo%3dbar%26st%3d0%26pn%3d1%26ps%3d100%26sortby%3d2%26resultview%3dsortbyPopular%26npgs%3d0%26qt%3droyal%2520london%2520hospital%2520whitechapel%26qt_raw%3droyal%2520london%2520hospital%2520whitechapel%26lic%3d3%26mr%3d0%26pr%3d0%26ot%3d0%26creative%3d%26ag%3d0%26hc%3d0%26pc%3d%26blackwhite%3d%26cutout%3d%26tbar%3d1%26et%3d0x000000000000000000000%26vp%3d0%26loc%3d0%26imgt%3d0%26dtfr%3d%26dtto%3d%26size%3d0xFF%26archive%3d1%26groupid%3d%26pseudoid%3d%26a%3d%26cdid%3d%26cdsrt%3d%26name%3d%26qn%3d%26apalib%3d%26apalic%3d%26lightbox%3d%26gname%3d%26gtype%3d%26xstx%3d0%26simid%3d%26saveQry%3d%26editorial%3d1%26nu%3d%26t%3d%26edoptin%3d%26customgeoip%3d%26cap%3d1%26cbstore%3d1%26vd%3d0%26lb%3d%26fi%3d2%26edrf%3d%26ispremium%3d1%26flip%3d0%26pl%3d) found that the sector has grown by 14% between Q1 2021 and Q1 2022. This figure includes the amount of completed [build-to-rent developments](https://www.financedigest.com/first-build-to-rent-development-in-hayes-celebrates-its-1st-anniversary.html "First Build-to-Rent development in Hayes celebrates its 1st Anniversary") as well as those in planning and in construction stages. From as recently as Q4 of 2021, the [sector has grown by 4% across all UK countries](https://www.financedigest.com/switzerlands-engineering-sector-urges-country-to-start-energy-saving-now.html "Switzerland’s engineering sector urges country to start energy saving now").

This level of growth is predicted to continue as the sector has proven strong, remaining resilient through adverse [market conditions](https://www.financedigest.com/opec-meeting-to-take-into-account-market-conditions-iraqi-official.html "OPEC+ meeting to take into account market conditions – Iraqi official"). And following the disruption that the buy-to-let [market saw with the tax and regulatory changes last year](https://www.financedigest.com/mclaren-to-enter-india-market-later-this-year.html "McLaren to enter India market later this year"), investors have begun to switch their attention to single family housing schemes. Such a move is proving beneficial, not only to move away from said regulatory changes targeted at [buy-to-let investors](https://www.financedigest.com/why-are-investors-checking-out-of-uk-buy-to-let-and-checking-in-to-hotel-investment.html "WHY ARE INVESTORS CHECKING OUT OF UK BUY-TO-LET AND CHECKING IN TO HOTEL INVESTMENT?"), but it also presents an opportunity to diversify PRS portfolios, as well as capitalising on a significantly growing market.  As it currently stands, the only block for the [continued growth of the sector](https://www.financedigest.com/how-video-technology-continues-to-boom-in-the-education-sector.html "How video technology continues to boom in the education sector") is the lack of available land and ‘oven-ready’ sites.

**BTR and the pandemic**

The pandemic also played a hand in this [rise in suburban rental demand](https://www.financedigest.com/euro-zone-likely-entering-recession-as-price-rises-hit-demand-pmi.html "Euro zone likely entering recession as price rises hit demand -PMI"). With the [Covid lockdowns](https://www.financedigest.com/in-shanghai-lockdown-blues-make-way-for-covid-testing-gripes.html "In Shanghai, lockdown blues make way for COVID testing gripes") shifting priorities around work/life balances, it’s proving to be a driving force in the desire for bigger, greener, and quieter living spaces and the hybrid working model that many have now adopted has drawn people away from cities.

As this drove demand in the wider commuter zones, the disparity between inner and outer [city residential rents](https://www.financedigest.com/why-are-there-so-few-apartments-to-rent-in-liverpool-city-centre.html "Why are there so few apartments to rent in Liverpool city centre?") increased. A [Hamptons report on London rentals- Dec 2021](https://www.hamptons.co.uk/research/articles/inner-london-rental-growth-turns-positive-for-the-first-time-since-the-pandemic-began#/) found that inner London rents have been falling for the last 21 consecutive months, falling to its lowest rate in April 2021 where prices were 22.1% lower than April 2020. And although Q4 of 2021 saw inner city rents catch up with the outer city rates as people [returned to work/university and global travel opened](https://www.financedigest.com/andalucian-open-returns-to-costa-del-golf-as-golfers-go-in-search-of-the-perfect-pad-close-to-the-fairway.html "Andalucian Open returns to ‘Costa del Golf’ as golfers go in search of the perfect pad close to the fairway") up, rents outside of London have increased by 16.1% compared to 5.9% across Greater London as a whole. This shift in rent rates shows a clear change in demand, boosting [rents in the suburbs and suppressing demand for city living](https://www.financedigest.com/redefining-renting-tipi-launches-the-best-way-to-live-in-london.html "REDEFINING RENTING: TIPI LAUNCHES ‘THE BEST WAY TO LIVE IN LONDON’").

**Looking ahead, to Europe**

With flexible working likely to [continue and the current financial pressures felt across](https://www.financedigest.com/workday-continues-momentum-across-europe.html "Workday continues momentum across Europe") the country predicted to linger, this surging demand for suburban rental space is unlikely to diminish any time soon. With this, the build-to-rent sector as an [investment market](https://www.financedigest.com/2018-property-investment-market-to-be-harder-but-more-rewarding-experts-reveal.html "2018 property investment market to be “harder but more rewarding,” experts reveal") is predicted grow to over £200bn in value, meaning many developers with suburban arms have begun looking towards modern methods of construction (MMC) to increase speed to market- so it is not surprising that we are seeing such strong investor appetite for this sector.

And although, the [British have historically placed a huge focus on ‘getting a foot on the property](https://www.financedigest.com/british-appetite-for-spanish-retirement-properties-unaffected-by-brexit.html "British appetite for Spanish retirement properties unaffected by Brexit") ladder’ such a shift in demand shows that many are stepping this line of thinking, which is in no way a negative thing. Some of the strongest economies in Europe have increasingly strong rental markets- a report from the [RPS Group](https://www.rpsgroup.com/insights/consulting-uki/is-suburban-build-to-rent-the-future-of-our-homes/) found that 60% of the German population are renting. It is only since Margaret Thatcher’s relief on buying homes that the British people placed such gravitas on owning property, but the [cost associated with buying](https://www.financedigest.com/blessing-or-burden-what-else-could-you-buy-for-the-cost-of-your-timeshare.html "Blessing or burden? What else could you buy for the cost of your timeshare?") a home has now become unrealistic for many families.

So, as the housing crisis continues to stand as one of the biggest challenges the country is currently facing, the family rental market provides a far more affordable option, as well as presenting an ideal [climate for investors](https://www.financedigest.com/institutional-investors-back-shell-board-lawsuit-over-climate-risk.html "Institutional investors back Shell board lawsuit over climate risk") to tap into.


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