Dreams of Generation Rent – Is the future BTR?

Back to News

Dreams of Generation Rent – Is the future BTR?

As house prices surged by 10.2pc in the year to March, their biggest annual increase since the financial crisis of 2007, concerns were raised about the future of home ownership in the UK. Speaking on the current planning system in @Telegraph, Housing Secretary @RobertJenrick acknowledged that there is now a whole generation that “feels priced out of the dream of home ownership”; a dream that is peculiarly unique to Brits which have, by and large, always been obsessed with the idea of purchasing homes.

The idea of renting in Europe has long been commonplace and it is projected the rental sector may take over homeownership by 2024 if market renters continue to increase at the current rate. Of course, unlike the UK, there are various criteria in European countries that are skewed towards the rental side. But the big picture indicates that the rise of the sharing economy has seen younger generations around the world embracing the idea of renting not only properties, but music, movies, clothes and services. Renting is very much a part of today’s commercial fabric – and for UK real estate, Ascend forecasts that a further 73,535 build to rent completions should reach the market by the start of 2025. As recently explored in a recent RealX discussion, the popular notion of Generation Rent is providing new perspectives on the make-up of residential real estate in UK cities and the role that build to rent properties will play in the future market.  

From a long-term institutional perspective, the modern rental market provides some stability, where the anxiety of potentially being turfed out at the back end of a 6-12 month lease is being combatted by BTR operators offering much longer leases on a traditional basis, with a guaranteed inflationary rent increase. 

Many will argue that renting also allows people to move between different bands very easily; when a couple needs to upsize from a one to a two bedroom after having their first child or are looking for something with a bit more outdoor space. Buying a house carries both an emotional and financial cost that creates barriers to movement in the market – and encouraging communities to constantly change and evolve can only be a good thing for cities – right?

For a rental market to really work, developers and planners first need to understand their communities to a tee. What’s affordable to one, perhaps isn’t affordable to another. The use of data in build to rent is crucial as through an understanding of the way a local economy is structured, developers can ensure the product they are delivering is in line with the needs of local people, and not likely to price them out of their own community, which is a key concern being raised by BTR sceptics.

Others will argue that the rental market, at its core, fails to address the very British issue of eventually upgrading to a more stable house – whether that’s to rent, or to buy. Ultimately it all comes down to supply bringing down house prices. If the UK can supercharge housing development for build to rent and build to sell, it means supply is going in the right direction and working to supress the steep market inflation defining Generation Rent.

The government’s new planning bill will hopefully go some way to providing young people with a choice to rent or to buy; choice being the key word. City planners will agree that creating diversity is critical – and you need to have a range of products from a housing perspective to attract young people that create that diversity and inspire the life of a place. Whether that is affordable rent, renting on the open market, going into shared ownership, or market sale – towns and cities need to think about different product types, and rental will no doubt play a significant part in that in the years to come.

Share this post

Back to News