35% growth in London’s luxury Build-2-Rent Sector

Prime Central London’s build/own-to-rent residential sector has grown by 35% over the last five years with 55% of tenancies for lettings priced above £2,500 per week now being in properties owned by either build/own-to-rent investor-developers or professional investors, says a new survey of tenancy data by leading Prime London estate agent Aston Chase.

Aston Chase highlight that five years ago the same figure was just 20%, with the Prime Central London lettings market in 2015 dominated by private landlords and “accidential landlords”; the latter being vendors trying to sell their properties and choosing to let them in order to generate income or to facilitate their move.

Aston Chase observe that this transform underlines the rise of professional build-to-rent investor-developers and other professional investors in the capital’s Prime lettings market. With a backdrop provided by well known Stamp Duty and Brexit issues, the emerging build/own-to-rent market in Central London is being driven by a lack of supply, real estate investors seeking good returns; and rising demand from American, British and European tenants.

The capital’s Prime build/own-to-rent sector has significant growth potential over the next five years says Aston Chase. The sector is forecast to grow by 30% per annum over the next five years and by 2025 the UK’s build-to-rent industry could have a valuation of £75 billion (Source: British Property Federation).

Aston Chase categorise a Prime Rental as a London residential property being let for £2,500 per week up to £5,000 per week. Super-Prime Rentals are properties being let for £5,000 per week, up to £40,000 per week.

Aston Chase explain that the build-to-rent sector consists of private rented residential dwellings designed specifically for renting rather than sale, typically owned by private or institutional investors and investor-developers.

Aston Chase highlight that the build-to-rent sector is well established in the USA, growing over the last three decades to become a market currently valued at over £65 billion, with 43,000 purpose built rental properties constructed in the United-States per annum (Source: Barclays).

Aston Chase contrast this to the build-to-rent sector in London and the UK which is still in its relative infancy. In the UK the industry only started in earnest over the last decade and there are currently just 14,800 completed and tenanted build-to-rent properties across Greater London: in a city with over 3.56 million dwellings in total.

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