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BTR embraces single families, as well as multi-let, in the NE

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By George Parker-Fuller


Published 26 June 2024


Prominent city centre developments have been at the forefront of the BTR development boom for multi occupancy apartments by young professionals and families. As the BTR market matures generally, and the investment model is established, funds and developers are driving growth in relation to a newer element of BTR which is now emerging; homes for rent by single families (SFR) and the North East is joining other regions in which SFR is experiencing substantial growth.

George Parker-Fuller, Head of Residential in the North of England at international law firm DAC Beachcroft looks at some of the emerging schemes.

The North East’s BTR sector continues to mature. Three major schemes in Newcastle - The Forge, Regent Centre and Hadrian’s Tower – have been in the vanguard of the trend. Most recently, Olympian Homes has secured funding from Hines for its Pottery Lane project which is set to become Newcastle city’s largest multi-family development.

The 325,000 sq ft development is being forward funded by the Hines European Property Partners fund. It will create 519 units delivered in two phases. The first 11-storey block, comprising 292 private units is scheduled for completion at the end of 2026, with an additional six-storey, 227-home asset due for delivery in 2027.

The project is located within Newcastle’s Forth Yards Regeneration Area, a priority zone for new investment at the core of city’s repositioning as a regional hub for the tech, life science and innovation industries.

Ross Blair, Senior Managing Director and Head of Hines UK, comments: “The rapid growth of Newcastle’s tech and innovation sectors, paired with its rising population and the strong reputation of its higher education institutions, is driving increased demand for high-quality rental accommodation in the city centre, particularly among young professionals.

“The scheme’s strong amenity provision and market-leading ESG credentials align with the post-pandemic priorities of Newcastle’s young professional renters. Its outstanding location adjacent to the waterfront and proximity to some of the city’s most ambitious new development projects will further enhance its appeal to this demographic in the coming years."

Meanwhile, as the BTR development pipeline moves forward, the level of latent demand is demonstrated by the upward shift in rents. Analysis by the Association for Rental Living of Newcastle’s BTR sector shows that in the year to last June, rents for studio and one-bedroom apartments had risen by 23%. Average rents for two-bedroom units had also seen a strong increase in rents of 13%.

Whilst the Pottery Lane scheme is a classic example of how high-specification, city centre BTR multi-family housing (MFH) projects are evolving, across the wider North East there is also a growing proliferation of developments which are looking to create homes for rent by single families. The relative affluence of the ‘young professional’ demographic that BTR schemes target has made it very popular with investors but the ‘SFR’ sector is now also demonstrating its potential.

The sector is predicted by some to have the highest growth trajectory of all real estate classes and is now considered an established asset class for UK property investors. Whilst still very much in its infancy – the sector only currently accounts for 0.3% of privately rented houses in the UK – the scope for SFR is widespread. 

By providing high-quality rental homes at sensible prices, neighbourhoods can be transformed by SFR projects which attract and retain the skills and talent which are crucial to an area’s long-term economic viability.

Developer Placefirst is becoming a prominent SFR provider in the North East. Last year, it secured planning consent for its 146-home Benwell Dene project, two miles west of Newcastle city centre.

The project will redevelop a 6.8-acre brownfield site which has been vacant for more than a decade into homes with two to four bedrooms which are built specifically for long-term private rent. Other Placefirst schemes in the region include Scholars View in Hetton-le-Hole; The Oaks at Esh Winning in Durham, and The Green in Hartlepool. The company has also been selected to deliver 220 new homes across two major regeneration schemes in Sunderland.

James Litherland, Head of Planning at Placefirst, comments: “The single-family rental model isn’t just delivering high-quality, sustainable new homes, it’s also delivering a better deal for communities up and down the UK, including in the North East.

“Professionally-managed neighbourhoods of houses for long-term rent as opposed to apartments – is quickly becoming the rental type of choice for a growing number of local authorities, including in the North East.”

Across Placefirst SFR developments as a whole, 42% of its residents have relocated from outside the local authority area with a fifth working for the NHS and a further third working in hospitality, retail, technology and education.

It is this broad-based demographic appeal that is compelling to both local authorities and investors. According to analysis by Savills, 60% of SFR households encompass children; 66% of residents are aged between 26-45; and average tenancy lengths are 4.4 years. New SFR developments also tend to score highly on ESG metrics. With all rented properties required to have an EPC rating of C or above by 2028, new build SFR homes can not only offer more energy-efficient living for tenants, but also a 100% compliant portfolio for landlords.

A further hallmark of the BTR sector, particularly when contrasted with more traditional build-to-sell housing delivery models which are dominated by new-build projects, is that BTR projects can also utilise refurbishments of existing buildings, such as the redevelopment of Cale Cross House in Newcastle by Beech Holdings. This can be a powerful force for regeneration in areas which have perhaps been written-off by mainstream developers who are focused on creating build-to-sell homes.

It’s perhaps a cliché that families want to ‘put down roots’, but in the context of the SFR market this is a major positive for investors as it promises long-term, sustainable income. And for the families who occupy them, SFR developments offer quality homes without the uncertainties of the fragmented private rented sector.

With a growing number of existing SFR neighbourhoods plus several more in the pipeline, the North East is clearly starting to reap the benefits of the sector.