Single Family Homes: A Key Growth Area in the UK's Build to Rent Market

The UK's Build to Rent (BTR) market is experiencing significant growth, with Single Family Homes (SFH) emerging as a crucial segment. Traditionally dominated by Multi-Family Homes (MFH), the BTR sector is now seeing increased demand for SFH, offering unique advantages for both investors and renters.

Our Director of Housing and BTR, Craig Osborne , discussed the rise of Single Family Homes in BTR:

Single Family Homes are becoming a popular choice for new and existing renters within the BTR Market. Some may have started their journey in Multi-Family Homes and desire a different way of living as their lifestyle may have changed, or families looking to rent may opt for more private outdoor space instead of the vast options multi-family developments are known for.

Distinguishing SFH from MFH?

SFH and MFH cater to different market needs, each offering distinct benefits:?

• Outdoor Spaces: SFH typically come with private gardens or outdoor spaces, which are highly appealing to families and individuals seeking more room and a connection to nature. MFH, on the other hand, often feature shared amenities such as gyms and communal gardens.
• Investment Dynamics: SFH tend to have smaller lot sizes than MFH, making them more accessible to a wider range of investors. This diversity within the BTR sector supports greater liquidity and attracts varied investor profiles.

The Impact of Institutional Investment

Institutional investors are increasingly purchasing SFH stock from developers, which has positively impacted the market by increasing the supply of rental homes. This influx of investment supports the growth of SFH within the BTR sector and ensures a steady pipeline of new, high-quality rental properties. Recent transactions have included;

• Lloyds Bank subsidiary, Lloyds Living purchasing 604 homes from Barratt Homes Developments.
• Legal & General ’s Suburban Build to Rent business (LGSBTR) acquiring 41 homes in Wintringham, St Neots from Stonebond.
• Packaged Living have acquired two additional developments, both in Milton Keynes, from Dandara – increasing their portfolio to 1500 homes.

Significant Growth in SFH Investment

The SFH sector in the UK is rapidly gaining momentum. Investors spent a record ￡1.9bn acquiring or funding over 6,200 homes last year, up fivefold from ￡388m in 2022, according to Knight Frank . In total, SFH investment accounted for just over 40% of all Build to Rent investment last year. The total number of units in the UK, either existing or proposed, is now just above 26,500, with 11,575 operational and a further 15,000 in the pipeline (under construction or with full planning).

Knight Frank's data also highlights that the total size of the SFH market, combining both operational homes and pipeline, has nearly trebled since 2018. This demonstrates the growing appetite from developers, investors, and lenders for the sector. A further acceleration in growth is expected, should investors realise their ambitions.

Shifting Market Dynamics

Knight Frank’s 2023 survey of over 50 of the largest investors across the UK Living Sectors (student accommodation, Build to Rent, and seniors housing) flagged SFH as one of the biggest growth areas, with 71% of respondents stating that they plan to target the sector in the coming five years, up from 45% who have invested recently.

The need for a step change in both delivery and investment in new high-quality rental stock is becoming more urgent. Analysis of listings data shows that the number of houses available to rent across the UK has dropped 41% compared with the 2017 to 2019 average. The fall has been particularly acute for two and three-bedroom houses, a key focus for SFH schemes.

?Benefits of Turnkey Furniture Solutions

Our turnkey furniture solutions are designed to enhance the attractiveness of SFH in the BTR market. By offering fully furnished homes, we enable landlords to:

1.??????? Maximise rental yields: Furnished properties can command higher rents compared to unfurnished ones, providing better returns for landlords.

2.??????? Reduce void periods: Ready-to-move-in homes attract tenants more quickly, reducing the time properties remain vacant.

3.??????? Enhance market appeal: Professionally designed interiors create a desirable living environment, helping to differentiate properties in a competitive market.

4.??????? Furnish flexibly: We offer flexible furniture packages, allowing providers to customise interiors to match customer preferences, thus adding an incentive for prospective renters.

A Focus on Solutions

At INVESTA BTR, we are committed to providing innovative solutions that meet the evolving needs of the BTR market, whilst always considering the wider community. Our turnkey furniture solutions and furniture-as-a-service offerings are designed to help providers optimise their properties for maximum appeal and profitability. By focusing on quality, convenience, and flexibility alongside our continued sustainability and community focus, we ensure that SFH within the BTR sector are not only attractive to tenants but also offer significant investment potential.?

Future Outlook

As the Single Family Homes segment continues to expand, it is poised to take a larger share of the BTR market. While Multi-Family Homes will still play a dominant role, the growing interest in SFH reflects the demand for more personalised, spacious living options. This trend offers exciting opportunities for investors, developers, and landlords who are prepared to meet the evolving needs of the rental market.

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