Property Development: is the Build-to-Rent model truly unique compared to traditional property development ventures?
The Build-to-Rent (BTR) sector, a relatively new property type that falls within the C3 Use Class, has seen significant growth in recent years. With over 240,000 homes in planning, under construction, or completed as of Q3 2022, the BTR sector is poised to reshape the UK's housing landscape.
However, the current National Planning Policy Framework (NPPF) only acknowledges BTR four times, with no mention in the body of the document outside the context of affordable housing. This lack of comprehensive policy guidance has not deterred the growth of BTR, which is now surpassing that of London, growing at almost triple the pace (20%) compared to the capital (7%).
The majority of English local planning authorities (LPAs) do not have a policy for BTR, instead taking a case-by-case approach based on viability. This ad hoc approach may be changing as the BTR sector matures and affordable housing policies for the sector become more established. In 2021, affordable units accounted for just 6% of all BTR, with much of it provided off-site through Section 106 agreements.
As the BTR model continues to evolve, it offers significant potential for community benefits beyond just affordable housing. Enlightened clients of LRG have extended the concept to include community hubs or incubators, often including nano breweries, bike hire facilities, and rapid electric charging points. Partnerships with local authorities can enable BTR to provide homes, social care, education, and leisure facilities, potentially cross-subsidising other property assets.
BTR suburban communities, a new format of BTR, are providing family homes outside urban areas with a strong sense of community. These suburban communities maintain the intrinsic values of BTR, such as high standards in service and management, a strong focus on sustainability, and a rich variety of services and amenities. The majority of English LPAs, excluding London, do not yet have a policy for BTR suburban communities.
The trend towards genuinely sustainable communities has been emerging for some time, but was hastened by the pandemic. BTR suburban communities cater to a diverse demographic, including accommodating several generations of a family and addressing the shortfall in later living accommodation and extra care facilities. The traditional housing estate is on the decline, with development evolving towards more integrated, community-oriented products that reflect local areas' specific needs.
The anticipated comprehensive address of BTR in December's re-write of the NPPF did not occur, with no reference to BTR whatsoever in the current version being consulted upon. This lack of policy guidance has not hindered the growth of BTR, but it may limit its potential to provide wider community benefits. Joint ventures between BTR developers and local authorities can deliver bespoke schemes, ideally suited to a specific location and its unique needs.
As the BTR sector continues to grow and evolve, it is clear that comprehensive policy guidance will be necessary to ensure that it can meet the most pressing needs of local communities and provide a wider selection of community benefits.
