Record population growth

The UK's population saw record growth last year, with a rise of 662,400 in the twelve months to June 2023 representing the largest annual increase since the ONS data collection began in 1971.?

For many years the stock of new housing has not kept pace with the population increases, which are also expected to continue at a faster rate than the rest of Europe.??

?More people need more homes but struggles in addressing the chronic under-supply of housing have been well documented. Persistent challenges include access to skills and materials, the UK planning system, global macroeconomic uncertainty and strained public finances have all severely limited delivery across all tenure types.??

Demand for renting has in turn also been driven by high house prices and mortgage costs, as well as a growing recognition that renting can give you access to a more flexible, high-quality service. Rental homes can often also be in a better location and of a higher-specification than would be affordable to buy, and where you also don’t have responsibility for maintenance costs.???

Residential rents have typically tracked inflation and whilst the extremely high inflationary levels experienced in 2022 and 2023 are now passing, we expect more elevated inflationary pressures over the next few years than seen in the post-GFC era. The residential for rent sector should continue to offer some inflationary protection to investors?

Build-to-rent / multi-family, single-family, co-living and other residential for rent categories all have the potential to serve the dual function of delivering reliable returns to investors, whilst also supporting the provision of much-needed high-quality housing.?

The UK’s institutional rental market is relatively under-developed relative to peers in the US and Europe and represents a viable avenue through which we can help fix our housing problem. In the UK, only around 20% of households rent their homes, versus 32% in the US and 40% in Germany. Moreover, the proportion of these homes owned by institutions in the UK in only 2%, compared to 41% in the US and 37% in Germany(1).???

But-to-let investors are currently leaving the sector, and the UK stands at a turning point in the economic cycle where we should see more domestic and international institutional investors enter the market.???

Moorfield Group currently has a c.￡120m BTR/multifamily project under development in Manchester, c.￡200m single-family for rent portfolio in London and Bristol, and a recently opened co-living scheme in London.

We have ambitions to continue to invest in residential for rent alongside our activities in student accommodation, retirement and nursing home investments that sit within our ‘living’ platform, managed by our in-house asset and operational management team.??

Note: (1) Source: Savills.?