Build-to-Rent growth in 2022 impacted by inflation and labour shortages
Build-to-Rent growth in 2022 impacted by inflation and labour shortages, according to the British Property Federation.
New analysis published today (8 February 2023) by the British Property Federation (BPF) shows the total number of Build-to-Rent (BtR) homes in planning, under construction or completed increased by 14% in 2022, rising from 212,916 to 242,548, but economic headwinds are stalling activity.
The analysis, conducted at the end of the fourth quarter in collaboration with Savills, shows a slowdown in the growth of the BtR sector, which has increased by an average of 28% per year since 2017.
A slowdown in BtR construction was pronounced in Q4, with build cost inflation, labour shortages and wider economic uncertainty meaning that construction starts were 24% lower than the same period in 2021 (15,600 in 2022; 20,400 in 2021).
Despite the current challenges, the BtR pipeline remains robust with 113,379 units in planning, up 14% year-on-year, and the regions set to see a significant increase in activity with a 17% annual increase in units in planning. The expansion of the BtR sector is further evidenced by the fact that 180 local authorities now have completed BtR homes, or units in the pipeline, up 29% on Q4 2021.
Ian Fletcher, Director of Policy, British Property Federation, comments:
“The Build-to-Rent market had continued to grow over the past twelve months, but we are seeing a slowdown in activity as inflation and an uncertain economic backdrop makes it more difficult to deliver.
“In the long-term, we expect the sector to continue to expand as a vital component of overall housing delivery, but Government must be careful not to stymie its progress.
“The watering down of national housebuilding targets may mean there is less urgency around allocating land for residential development, and there is already evidence that the rent cap introduced in Scotland, and being debated in Bristol, is deterring investment.
“The BtR sector has a major role to play in urban regeneration and levelling up and we cannot take its success for granted.”
Guy Whittaker, Associate at Savills, added:
“Investment appetite for Build-to-Rent was resilient in 2022 and resulted in £4.3 billion of investment, a fourth consecutive record-breaking year.
“That said, it is clear that the sector is not immune to headwinds facing the construction industry, as shown by a Q4 slowdown in starts and completions.
With weaker home buyer demand, residential development activity is likely to be subdued in 2023. Build-to-Rent can offer an alternative exit strategy for developers looking to maintain sales rates and de-risk their pipelines.
“The BtR sector can therefore play a key role in maintaining construction output and support housing delivery nationwide.”
Kindly shared by Property Wire
Main article photo courtesy of Pixabay
