Private Residential Rental Market Report - UK

Transcription

1 Private Residential Rental Market Report - UK Published: 13/06/2018 / Number of Pages: 85 / Price: Introduction and Overview The 2nd edition of the 'Private Residential Rental Market Report - UK ' covers the UK Private Residential (PRS) market and the and the associated Build-to-Rent (BTR) sector which have experienced significant market growth in recent years. This edition specifically reviews construction/development opportunities in the PRS sector. Key issues covered in the report: Structure, size and value of the UK PRS sector. Analysis of PRS stock by tenure, property type and age. Future growth and prospects with forecasts to The BTR market, construction output estimates, volume estimates, key drivers in the market. Analysis of leading housing associations and local authorities involved in the PRS and BTR sectors. Key drivers - housing availability & supply issues, rising house prices, planning constraints, land availability, etc. Review of the key stakeholders and supply chain companies. Areas of particular interest: Value and ownership of the UK PRS sector. Smaller private landlords, institutional and large corporate investors. Analysis of the BTR market, scale of operation, growth factors, forecasts to 2022, changing structure of the UK housing industry. The largest volume of BTR is coming through in urban city centres with London, Manchester, Birmingham and Leeds accounting for a large proportion of the sector. Leading developers of BTR units in London. Government support for PRS and BTR - including the Homebuilding Fund and availability of finance. Detailed market data and insight on the private residential rental sector by AMA Research, a leading UK provider of construction market intelligence. Some of the companies included: Barratt Developments, Belgrave Neighbourhood Housing Co-operative (BNHC), Berkeley Homes, Bouygues, Bovis, Caddick

2 Construction, Cossington Housing Co-operative (CHC, Countryside Properties, Crest Nicolson, Gatehouse Bank, Glasgow Housing Association (GHA), Glenbrook Property, Graham Construction, Grainger plc, Keepmoat Homes, Kier Group, Linkcity, M&G Real, Mears Group, MITIE, Mulbury Homes, Peel Land & Property, Pinnacle PSG, Redrow, Rydon, SDL Group, Seddon, Sigma Capital, Telford Homes, Taylor Wimpey, The Guinness Partnership, Tower Hamlets, Uliving, Vesta, Vinci Facilities, Wates Living Space, Willmott Dixon, Winvic Construction. THE PRIVATE RESIDENTIAL RENTAL MARKET Overview of the PRS and BTR sectors in the UK. Overall size of the PRS. UK rental demand and future growth of the UK PRS. Analysis of PRS stock by type and age. Outline of the UK PRS market by region & key city, including London. Total construction output to Construction output in the residential sector - Private Residential Construction; Private Residential RMI. The BTR market size, recent growth history, future prospects with forecasts to BTR market in terms of volumes and values. KEY ISSUES AND MARKET DRIVERS Housing supply - UK housebuilding progress and targets. UK housing starts and completions. Housing measures in the 2017 Autumn Budget and 2018 Spring Statement. Planning considerations in the PRS and in the BTR industry. Planning for BTR - changes to the National Planning Policy Framework (NPPF); changes to Permitted Development Rights (PDR); land availability - use of public sector land for PRS schemes; housing zones. House prices and affordability - PRS rental growth vs. house price growth; mortgage availability. Tax changes affecting Buy-to-Let. Government support and funding for PRS and Build-to-Rent Fund/Home Building Fund; Private Rented Sector Housing Guarantee; Affordable Homes Guarantee Programme (AHGP). Other sources of funding, use of offsite construction in the PRS and BTR industry. Ownership of the PRS market - leading investors/developers in the PRS; PRS developer/operator profiles; etc. Housing association PRS and BTR activity/local authorities/councils. KEY STAKEHOLDERS/SUPPLY CHAIN OPERATORS Review of the key stakeholders and supply chain companies in the industry including contractors, consultants, housebuilders and FM companies, activities and opportunities for construction, maintenance and refurbishment work in PRS/BTR schemes. Procurement in the industry - leading house-builders in the PRS. Leading construction contractors and FM companies in the industry. Report Summary

3 The number of households in the Private Rented Sector (PRS) has increased rapidly over the past decade, partly reflecting affordability barriers to home-ownership. Indeed, over the past decade ( ) the PRS market has been one of the fastest growing sub-sectors of the property market, growing by over 100% across the regions and by around 90% in London. Since , private rental has been the second largest housing tenure in England behind owner occupation, and overtaking social housing. One of the major drivers of PRS growth has been the lack of housing availability and supply, particularly for first-time buyers, exacerbated by rising house prices in London, the South-east and other major cities. The bulk of this rental demand has been driven by the age-group, the so-called 'Generation Rent', with renters in this age group more than doubling since Population growth, net migration (increasing number of young adults) and a mobile younger workforce have all contributed to increased demand for homes in the PRS. Growth has also been driven by the combination of rising house prices, stagnant wages and tighter mortgage lending, which have made home ownership increasingly unaffordable, despite historically low interest rates. This growth looks set to continue in the medium term, with the rental market expected to expand by over 2m by 2030, driven primarily by the 'Generation Rent' (20-45 year olds) demographic and it is this sector of the rental market which sees appeal in lifestyle-branded homes. The Government is aiming to encourage private institutional investors into the PRS, which is likely to lead to an increased demand from both well-established residential investors and new entrants into the market including pension and insurance funds. List of Contents Contents Listing 1. INTRODUCTION BACKGROUND SOURCES OF INFORMATION 8 2. SUMMARY AND FUTURE PROSPECTS SUMMARY DRIVERS AND MARKET PROSPECTS FOR THE PRS & BTR 9 3. ECONOMIC ENVIRONMENT GDP INFLATION & INTEREST RATES UNEMPLOYMENT HOUSEHOLD CONSUMPTION HOUSING & CONSTRUCTION STERLING POPULATION PROFILE 19

4 3.8 CONCLUSIONS PRIVATE RESIDENTIAL RENTAL MARKET IN THE UK MARKET SCOPE, DEFINITION AND OVERVIEW OF THE PRIVATE RESIDENTIAL RENTED SECTOR (PRS) MARKET SIZE Overall Size of the Residential Rental Market Future Growth of the UK Private Residential Rental Market Analysis of PRS Stock by Type and Age VALUE AND OWNERSHIP OF THE UK RESIDENTIAL RENTAL MARKET Overall Value of the UK Residential Rental Market BUILDING AND CONSTRUCTION OUTPUT IN THE UK RESIDENTIAL RENTAL MARKET Total Construction Output to Construction Output in the Residential Sector Private Rented Sector Development - Build to Rent UK RESIDENTIAL RENTAL MARKET - REGIONAL ANALYSIS UK Residential Rental Market by Region London Residential Rental Market PRS - KEY ISSUES AND MARKET DRIVERS HOUSING SUPPLY UK Housebuilding Progress and Targets UK Housing Starts and Completions Planning Considerations in the PRS Land Availability Housing Zones HOUSING AFFORDABILITY House Prices and Affordability Mortgage Availability 60

5 5.3 FINANCIAL SUPPORT FOR PRS Government Support and Funding for PRS Other Sources of Funding in the PRS Market Use of Offsite Construction in the PRS Market PRS - KEY END USE SECTORS MARKET MIX Ownership of the Private Residential Rental Market SMALL SCALE PRS LANDLORDS INSTITUTIONAL INVESTORS/DEVELOPERS Leading Investors/Developers in the PRS HOUSING ASSOCIATIONS Housing Association PRS Activity PRS - KEY STAKEHOLDERS/SUPPLY CHAIN OPERATORS OVERVIEW Procurement in the PRS HOUSEBUILDERS CONTRACTORS AND CONSULTANTS FM COMPANIES 82 Tables & Charts CHART 1: GROWTH OF THE PRS SECTOR TO (NO. DWELLINGS) (M) 9 CHART 2: CONTRACTOR OUTPUT VALUE OF THE BUILD TO RENT MARKET BY VALUE ( BN AT CURRENT PRICES) 12 TABLE 3: GDP DATA KEY CONSTITUENT ELEMENTS 14 CHART 4: INTEREST RATES AND INFLATION (CPI) FROM CHART 5: PDI & SAVINGS RATIO AT CURRENT PRICES TABLE 6: EXCHANGE RATE FLUCTUATIONS STERLING TO THE DOLLAR, AND THE EURO, SPOT RATES 18

6 TABLE 7: DWELLING STOCK IN ENGLAND BY TENURE: TO ('000 DWELLINGS) 23 TABLE 8: PRS DWELLING STOCK IN ENGLAND: TO ('000 DWELLINGS & % OF ALL STOCK) 25 CHART 9: UK PRIVATE RENTED SECTOR BY PROPERTY TYPE (%) CHART 10: AGE OF PRS STOCK IN ENGLAND (%) CHART 11: % OF NON-DECENT HOMES BY TENURE TO CHART 12: TOTAL VALUE OF ESTABLISHED PRS STOCK IN THE UK: ( BN) 29 CHART 13: VALUE OF PRS STOCK IN THE UK BY REGION (%) 30 CHART 14: VALUE OF TOTAL CONSTRUCTION OUTPUT BY VALUE ( BN AT CURRENT PRICES) 31 TABLE 15: VALUE OF TOTAL RESIDENTIAL CONSTRUCTION OUTPUT (PUBLIC AND PRIVATE) (NEW BUILD AND RMI) BY VALUE ( BN AT CURRENT PRICES) 32 TABLE 16: PRIVATE RESIDENTIAL CONSTRUCTION OUTPUT (NEW BUILD AND RMI) BY VALUE ( BN AT CURRENT PRICES) 34 CHART 17: CONTRACTOR OUTPUT VALUE OF THE BUILD TO RENT MARKET BY VALUE ( BN AT CURRENT PRICES) 36 CHART 18: VOLUME SHARE BTR FROM ALL NEW BUILD RESIDENTIAL 38 CHART 19: TYPES OF ORGANISATION COMPLETING PRS SCHEMES BY TABLE 20: ENGLAND - REGIONAL CONCENTRATION OF PRS STOCK 41 TABLE 21: TOP REGIONAL PRS MARKETS (POPULATION/HOUSING TENURE/HOUSE PRICES AND PRS RENTS) 43 TABLE 22: LONDON BOROUGHS - PRS DATA (POPULATION/HOUSING TENURE/HOUSE PRICES AND PRS RENTS) 47 CHART 23: NEW HOUSING STARTS IN THE UK BY VOLUME OF DWELLINGS 50 CHART 24: NEW HOUSING COMPLETIONS IN THE UK BY VOLUME OF DWELLINGS 51 TABLE 25: HOUSING ZONES IN THE UK BY REGION - EST. NO. OF HOMES AND FUNDING ( M) 57 TABLE 26: LONDON HOUSING ZONES BY BOROUGH - EST. NO. OF HOMES BY ZONE 58 TABLE 27: AFFORDABILITY FACTORS UK - AVERAGE DWELLING PRICE AND EARNINGS RATIO: YEAR TO DECEMBER CHART 28: RENTAL GROWTH VS. HOUSE PRICE GROWTH (% CHANGE) CHART 29: VOLUME AND VALUE OF BUY-TO-LET MORTGAGE ADVANCES ( BN) 61

7 CHART 30: ESTIMATED OWNERSHIP OF PRS STOCK IN THE UK TYPE OF OWNER: ( BN) AND (%) 65 TABLE 31: LEADING OWNERS OF PRS STOCK: UNITS COMPLETED AND PLANNED 67 CHART 32: FORWARD PLANS OF PRS UNITS BY KEY OPERATOR 70 TABLE 33: LEADING HOUSING ASSOCIATIONS IN THE PRS/BUILD-TO-RENT SECTOR 71 TABLE 34: LONDON BOROUGHS - COUNCIL-OWNED DEVELOPMENT COMPANIES DELIVERING PRS 76 The 'Private Residential Rental Market Report - UK ' costs 845+VAT (if applicable) for a PDF version. Other formats are available - click here for a information about available report formats. All AMA reports are sold with a single user licence as standard. For more information about AMA licences click here. About AMA Research Established in 1989, AMA Research is widely recognised as the leading specialist provider of market research to the UK building and construction industries. AMA s research and analysis goes beyond the more commonly available range of statistical and company information to provide expert, informed commentary and in-depth market analysis, making the reports a valuable and relevant resource for understanding the UK s construction and associated markets. We offer the following: Consultancy and bespoke research projects Published research reports high quality, detailed research reviews covering a wide range of environmental, building and construction products. Our extensive experience and in-house research database enables us to offer specialised and flexible bespoke research services, as well as giving excellent value for money. Our experienced in-house team of researchers are experts in their fields and adept in conducting original and relevant research for reports or bespoke projects, and key decision makers across the building and construction industries, both in the UK and abroad, frequently use our high-quality reports as their primary source of market data. To find out more about AMA Research, visit: or call us on