The number of rental units in London’s construction pipeline increased by more than six times between 2014 and 2015, according to data from EGi London Residential Research.
A total of 585 rental homes were either under construction or had completed during 2014. By 2015 this number had risen to 4,276, a rise of 630%.
The research measures schemes comprising ten or more units that are
being placed on the rental market. It includes those that have been designed for either the rental or sale markets.
“While we have seen a substantial rise in the number of purpose-built rental homes being developed, it is probably safe to say that the developers of a lot of these homes may initially have planned to sell on the open market,” said Daniel Smith, senior research analysis at EGi.
“For house builders, it’s a way of de-risking schemes when values, particularly in central London, look shaky. For investors looking for a foothold in a competitive market, it is an interesting proposition.”
Inner London accounted for 1,180 of the units, or 28%. Outer London accounted for 3,096 units.
The proportion of units in inner and outer London also changed significantly. In 2014, 51% of units were in inner London. However, higher land values have pushed developers further out. In particular, specialist build-to-rent operators, who struggle to make schemes viable, have switched focus to outer London.
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