Investment in single-family homes has experienced a fivefold increase, according to a recent report.
The UK's build-to-rent (BTR) sector is witnessing a shift towards single-family housing (SFH), with this trend expected to continue well into 2024 and beyond. Knight Frank, a leading global real estate consultancy, has highlighted this development in their 2024 Single Housing Family (SFH) report.
According to Knight Frank, institutional investors are increasingly attracted to the SFH sector, particularly suburban markets. The report provides evidence that the SFH sector can help address the UK's housing shortage, especially in suburban areas. In 2023, SFH investment accounted for more than 40% of all BTR investment in the UK, and this figure is projected to rise.
Investors plan to commit £17bn of capital to the SFH sector within the next five years, a significant increase compared to previous years. This investment is expected to result in the number of SFH rental units in the UK almost tripling from the current level of 26,575 homes.
The geographic distribution of the SFH sector is broadening, with institutional investors increasingly focusing on suburban markets across regions like the East of England and West Midlands. Over 6,200 rental homes were acquired or funded in 2023, a testament to the growing interest in the SFH sector.
The amount of money invested into SFH in 2023 was £1.9bn, a fivefold increase compared to the £388m committed in 2022. This significant growth indicates a strong investor appetite for suburban, purpose-built housing that appeals to renters seeking more space and flexibility.
Developers and housebuilders are also becoming more comfortable with incorporating single family housing into their wider sales and marketing strategies. The move towards SFH in the BTR sector could provide renters with more suburban and family-friendly rental options, potentially easing pressure on urban multifamily markets.
As the BTR sector evolves, property investors are becoming more professional and strategic. They are increasingly using limited companies to hold buy-to-let portfolios, reflecting a longer-term approach aligned with market dynamics and regulatory changes.
The UK government's policies, including increased annual housebuilding targets and a £3.75 billion support package for residential construction, are likely to stimulate new housing starts, some of which may support SFH projects. The move towards SFH in the BTR sector is expected to drive further consolidation and professionalization of rental housing, with potential benefits in quality and management standards driven by forthcoming renters’ rights legislation.
In conclusion, the UK housing market in 2024 and beyond is characterized by a growing trend of increased investment into single-family housing within the build-to-rent sector, supported by government initiatives and investor strategies. This trend is expected to influence rental supply dynamics, offering more diverse housing options and encouraging professionalization in the private rental market.
- Institutional investors are increasingly focusing on the single-family housing (SFH) sector, with the amount of money invested into SFH expected to reach £17bn within the next five years.
- The report from Knight Frank provides evidence that the SFH sector can help address the UK's housing shortage, particularly in suburban areas, as SFH investment accounted for more than 40% of all build-to-rent (BTR) investment in 2023.
- The number of SFH rental units in the UK is projected to almost triple from the current level of 26,575 homes by 2024, as a result of increased investment in the sector.
