Assessing BTR progress since 2017
I’d like to take you back to the year 2017, which was labelled by the Telegraph as the “dawn of build-to-rent revolution”. Indeed, the government just published “Fixing our broken housing market” recognising the need for more good quality privately rented homes; announced funding to kick-start the first 10,000 Build to Rent (BTR), homes; and promised to change the National Planning Policy Framework (NPPF) telling Councils to proactively plan for more BTR units.
The 2018 version of NPPF delivered on the promise. It incorporated a definition of BTR, as purpose-built housing that is typically 100% rented out, where schemes usually offer longer tenancy agreements of three years or more, and will typically be professionally managed stock in single ownership and management control. At the same time, the PPG was revised to direct Local Authorities, as part of their plan-making process, to use a local housing need assessment to take into account the need for a range of housing types and tenures in their area including provisions for those who wish to rent. If a need is identified, authorities are to include a planning policy setting out their approach to promoting and accommodating BTR.
Five years on, the BTR sector has boomed. According to research undertaken by Ascend Properties, whilst between 2017 and 2018, the number of new BTR completions reaching the market grew by 1%, the sector gained serious momentum between 2018 and 2019, with new completions jumping by 54% on an annual basis. To put this into perspective, new build completions – excluding BTR – increased by just 6% during the same period. Unsurprisingly, in the Covid-ridden 2020, BTR completions fell, resulting in a year on year decline of -20%. However, despite this decline, the overall number of BTR units has grown by 23% compared to 2019. The British Property Federation (BPF) latest statistics on BTR show that in Q2 of 2021 there were 62,274 units completed vs 8338 units in Q1 of 2018 – this represents an increase of 647%! It should be noted that further 39,524 units are under construction and 93,800 units in planning. As such the number of BTR schemes has reached a whopping total of 195,598 units in 2021.
Ascend forecasts that by 2025, BTR completed stock could hit around 127,285 units.
And who is building BTRs? According to BPF, the large majority of units (91%) are private bodies (such as UK Housebuilders, and national and international developers), with only 9% being built by Register Providers.
And where? According to BPF 92% of all schemes, are in an urban location (as opposed to suburban). There is also a clear pattern developing:
- Of the total number of all BTR units 43% are in London and 57% in the Regions – we will discuss London separately in a minute.
- A great number of schemes are located in London’s commuter towns, such as Slough, Reading, Basildon, Milton Keynes, Stevenage, Woking, Crawley, Maidstone and Chelmsford.
- The key Regional BTR locations are the northern English cities of Manchester, Liverpool, Leeds, Sheffield and Newcastle Upon Tyne.
- There is also a great number of units in the Midlands, focusing in and around Birmingham, with Wolverhampton, Leicester, Nottingham, Coventry and Shrewsbury all affected.
- Larger coastal towns of Brighton, Portsmouth, Southampton, and Bournemouth are also starting to host BTRs.
- Cardiff, Bristol, Bath and Exeter are also hot spots.
So, let's take a closer look at London
Back in 2018, according to the BPF, London had approximal 55,000 new BTR homes that have either been completed, were under construction, or have been granted planning permission. At the time Nexus Planning undertook an assessment of the London Boroughs to understand whether the directive by the government to proactively plan for more BTR has been embraced.
At the time we found that, of the 33 Local Authorities operating in London, about half made no reference to BTR in their adopted or emerging planning policy. Just 30% of Local Authorities in London had clear, positive positions on the sector, evident through policies or guidance relating to BTR. Whilst the remaining Local Authorities’ planning policy and/or guidance documents acknowledge the BTR sector, they did not provide clear policy to assist with delivering such developments.
The latest 2021 figures by BPF show that since 2018 the number of BTR units in London has grown by circa 54%, reaching 84,682 units that have either been completed, are under construction, or in planning. However, BTR activity levels differ across the boroughs:
- Newham, Brent and Croydon are the boroughs with the greatest number of BTR units either already delivered or in construction.
- Newham, Barnet, Barking and Dagenham, Brent, Southwark, and Tower Hamlets are the boroughs with the greatest number of BTR units that are currently in the planning stage.
- Kensington& Chelsea, and Bexley are the boroughs with the least activity both in terms of exiting units and those planned.
With this in mind, Nexus Planning decided to once again review the policy position. We have looked at either the adopted and the emerging Local Plan documents at 2021 and found that overall, there has been a clearly improvement in the positive policy context since 2018. However, the correlation between the presence of positive a BTR policy and the number of BTR units (either completed, under construction or in planning) is less clear:
- 45% (15) of London’s LPAs have active BRT (or private rented sector) policies. Together these hold approximately 56% of all London’s BTR units
- 30% (10) of London’s LPAs (namely Southwark, Redbridge, Haringey, Kingston Upon Thames, Camden, Richmond-upon-Thames, Bromley, Bexley) refer to BRT (or private rented sector) but do not have any policies directly dedicated to the sector. Together these hold approximately 13% of all London’s BTR units
- 24% (8) of London’s LPAs are still silent on the matter (namely, Barking and Dagenham, Greenwich, Ealing, Croydon, Lewisham, Hounslow, Havering, Harrow, Hillingdon, Sutton). However, together these hold approximately 31% of all London’s BTR units.
Perhaps the key to this lack of correlation is the London Plan, which has been “on it” since the start when the 2017 Draft London Plan introduced a BTR-specific policy, recognising its role in accelerating delivery and setting out criteria to be met by successful schemes. The London Plan has since been adopted (March 2021), stating in bold that boroughs should take a positive approach to the BTR sector to enable it to better contribute to the delivery of new homes. So, essentially even if a borough lacks its own policies on BTR, the London Plan, being part of the Development Plan, “opens the door” for any such schemes.
In conclusion, it is not surprising that London, with its capital city status and the proactive Development Plan, is the mega-hot-spot for BTR. Whilst many regional locations are also attracting BTR schemes, many Local Authorities across the country are yet to recognise and embrace BTR within their Development Plans. As such, navigating BTR schemes through the Planning System can still pose a challenge.
Nexus Planning recently acted on the first ever BTR scheme in Mole Valley District Council, where planning permission was secured for 214 BTR units. For our insight on challenges and lessons learned please check out our recent blog on Randalls Way, Leatherhead.
If you are interested in learning more about BTR, or would like to discuss your own BTR project, please don’t hesitate to contact the Nexus Planning London office.
Authored by Katya Samokhvalova, Associate Planner.