Build-to-Rent investment predicted to triple by 2020

The size of the Build-to-Rent market is predicted to treble in size in the next five years, according to research by Knight Frank.

Currently Build-to-Rent makes up 2% of all private rented housing stock by value. But researchers believe that will increase to 5% by 2020. Its total value is forecast to be £50 billion, up from around £15 billion today.

Investors are also planning on holding onto the properties for some time, with 71% intending to keep them for more than 10 years, and 7% more than 40 years.

James Mannix, Head of Residential Capital Markets at Knight Frank said: “In 5 years’ time large investors will have invested £50 billion in the Private Rented Sector – around 5% of the current stock.

“Today 5.4 million people live within the sector. If current trends continue this will rise to more than 6.75 million within the same timeframe. Most of the demand in the rented sector is from young economically active people with concentrations in urban centres.

“These people view themselves as being relatively transient and renting affords them the flexibility to upgrade, downgrade or move according to their circumstance.”

Land to build on was seen as the biggest obstacle to developing private rental stock, followed by planning policy with market conditions a distant 4th.

It’s also one sector where potential yields are better outside the capital than inside, with investors expecting yields to settle at an average of 6.5% in city centres outside London, compared to 4.75% inside.

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