The time required for build-to-rent planning applications has significantly increased over the past decade, with 40% of sites achieving detailed planning permission last year taking at least a year to do so.
The analysis, conducted at the end of the fourth quarter by the British Property Federation in collaboration with Savills, found that the proportion of BTR developments taking more than a year to get planning consent has increased from 7% in 2014 to 40% last year. Figures were consistent despite variations in scheme size and location, suggesting planning times are getting longer because of the application process.
The number of BTR homes with detailed permission in Q4 2023 was 58,000, the highest number on record. This suggests a strong pipeline of future growth. Starts, however, have deteriorated over recent quarters, reaching 12,500 units in Q4 2023, down from a post-pandemic peak of 25,000 units in Q3 2022.
Despite the planning challenge, the total number of BTR homes completed in the UK has reached 100,300 units, an uplift of 17% nationally year-on-year.
The sector continues to expand across the UK, as the regions see a 23% year-on-year increase on the number of BTR homes under construction, almost double that of London (12%). The BTR pipeline in the regions has also increased by 8% quarter-on-quarter and by 22% on an annual basis with 77,282 homes planned. Completions reached 46,700 in London and 53,600 in the regions.
Ian Fletcher, director of policy at the British Property Federation, said: “The build-to-rent market has grown significantly throughout the past decade. While reaching such a significant milestone for the sector is encouraging, we must ensure current challenges are temporary. Sentiment certainly is improving, and when interest rate cuts become real, rather than talked about, I would expect the sector to expand rapidly, given the strong pipeline of units that exist with planning permission.”
He added: “We lead an ambitious sector that delivers a great product. A target of 30,000 desperately needed rental homes a year is eminently doable, but it requires support. The research we are making available illustrates one of the structural challenges to the sector – time in planning is getting longer. While we cannot say for certain what part of the planning process is leading to increased times, it is crucial to recognise that the more drawn out the development process, the longer it takes to get to an investor’s goal – income. It does, therefore, matter a great deal and is a brake on the growth of the sector.”
Guy Whittaker, head of UK build-to-rent research at Savills, said: “Investment into BTR proved resilient in 2023, in spite of challenges around the cost of debt and continued material and labour cost inflation. Investment continues to be directed towards development, and the deals struck this year will ultimately deliver 12,000 much-needed homes for private renters.
“Investor appetite continues to grow, but the time taken to bring homes through the planning system, as our research demonstrates, remains a challenge. With schemes taking longer to work their way from application to permission, this reduces the number of “oven-ready” sites, given investors are unlikely to take planning risk. Boosting the number of consented sites is therefore crucial to allow the sector to deliver on its huge growth potential”.
Photo © Peter Matthews, courtesy of SEC Newgate
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