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After a decade of rapid growth, the UK’s build-to-rent (BTR) sector approached 100,000 completed units at the end of 2023. With a further 180,000 units under construction or in the pipeline, the sector is expected to double in size in the next five years - fuelled by greater demand, diversification and tech developments. Here’s our top 10 BTR trends to follow in 2024.
- Demand outstripping supply
High house prices and interest rates in 2023 have made deposits and mortgages less affordable for would-be buyers - switching their attention to renting. But the lack of traditional rental properties on the market - especially in areas like London - has led to average rents increasing by 6% during 2023. With home ownership and the private rental sector increasingly unattainable, demand for BTR properties is expected to increase beyond supply.
- Heightened customer expectations
Greater demand also comes with greater customer expectations. As BTR is no longer a ‘new’ concept, tenants are looking for properties that go beyond ‘good value’ and good location. Be it sustainable apartments, well-run amenities, responsive maintenance or impeccable communication with operators, BTR tenants increasingly expect a professionally managed living experience. Operators harnessing PropTech to deliver a seamless long-stay booking journey and exceptional long-stay experiences will stand out from the crowd.
- Beyond single-family homes
In response to unaffordable mortgages, it’s no surprise to see single-family homes as the predominant BTR segment, accounting for 42% of the £4.5bn BTR investment in 2023. Savills estimates a total 70,000 single-family housing units by 2032 (making up 18% of the UK BTR market), but the sector is not solely focused on 1 or 2-bed apartments. From studios and cottages to townhouses and five-bed family homes, there is an increasing diversification of unit types in BTR, catering to a variety of demographics and lifestyle choices.
- Increasing regionality
According to LSH research, London, Manchester and Salford makeup two-thirds of the UK's BTR stock, but over 50% of the forthcoming units will be built in other markets, including Birmingham, Edinburgh, Glasgow and Leeds. Burgeoning urban centres are well-placed for BTR investment, but the rise of hybrid working (28% of working days are now conducted from home) means BTR developments could also flourish in communities far from traditional job centres. Operators using property management systems to manage multiple properties across multiple locations will reap the most rewards.
- Older residents
While the flexibility of BTR appeals most to the first-time buyer age group, the convenience, community and facilities of BTR are attracting an increasing number of over-40s. According to the Centre For Aging Better, there are double the number of 50-65 year-old renters than 10 years ago, including empty nesters looking to downsize or retirees searching for less stressful accommodation (i.e. no need to handle property upkeep) with on-site care.
- Sustainability developments
Sustainability is a must-have for BTR renters - especially among younger tenants. For example, 47% of renters consider green building management as a ‘deal-breaker’ when choosing a rental, rising to 59% among 18-24-year-olds. Even BTR developments constructed with sustainably-sourced materials and energy-efficient designs will need to implement green technology, such as smart heating, sensor-based lighting and digital waste management platforms, into their PMS in 2024.
- A new standard of ‘stand-out’ amenities
Not many people can afford a spa, gym or cinema in their home – that’s why build-to-rent amenities make the sector stand out from traditional private renting. But ‘stand-out’ amenities, such as coworking facilities and cafes, are now standard in BTR properties. To differentiate themselves, BTR properties will increasingly add amenities that chime with their target demographics, such as sound studios, VR rooms and wellness facilities for younger tenants, and reading rooms, pool clubs and gardening plots for older tenants. Operators that use digital platforms to run amenities (and enable residents to easily book classes or register for events) will set the bar.
- Community is the key to retention
Renters crave community and a sense of belonging. BTR is perfectly poised to cultivate distinct communities for each property location using digital guest apps to set up social programmes, organise events and facilitate communication between residents (i.e. set up a weekday creche or watch a sporting event in the cinema room). Building a community helps operators make their properties more ‘sticky’ by creating an environment that renters never want to leave. Given residents are 47% more likely to renew their lease if they have 7+ friends in the property, BTR operators should increasingly focus on community as a retention strategy.
- Emergence of long-stay technology
BTR tenants lean towards longer stays, with 92% of BTR properties offering 1-3 year leases. When making a longer-term accommodation decision, tenants are careful in taking more time to ensure the property is the right choice. But, they’re not always able to visit in person, especially if it’s a relocation or moving far away. As such, operators need to embrace long-stay specific PropTech to attract tenants. From 360 virtual tours and digital checklists at the viewing stage to putting down deposits and completing digital inventories in one seamless digital booking journey, long-stay property management software will become a must-have for BTR.
- Mixed-use developments
While other property segments have struggled over recent years, BTR has surged ahead, showing resilience to market shocks and achieving impressive growth. This has not gone unnoticed by major players in the property market with the likes of Grainger and Barings diving into the BTR market and leading serviced apartment operator Viridian Apartments launching its BTR brand Mura Living with a mixed-use development (80% BTR, 20% serviced apartment). With flexible property management software making it easy to manage mixed-use residential properties, BTR-crossover developments will become more popular in 2024.
Boost your BTR growth
According to Knight Frank, the UK’s BTR sector will rise in value from £71 billion in 2023 to £126 billion in 2028. To take advantage of this growth, reach out to res:harmonics and learn how our flexible all-in-one PMS can streamline your BTR operations.
Download the Ultimate Guide to Coliving Management Software 2023 to learn how property management software supports long-stay operators.
Request a demo to speak to someone at res:harmonics about how our software can automate and scale up your BTR business.
