Scotland is lagging behind in the build-to-rent sector, despite rising demand and favourable conditions for growth, according to research.
A report released today highlighted the continuing gulf between planned build-to-rent (BTR) homes north and south of the Border, showing Scotland plans to create some 4,000 homes compared with England’s 124,000.
This latest research indicates a continuing trend, as the Scottish Property Federation published figures at the end of the first quarter this year showing that for every BTR home in Scotland, the north-west of England had almost ten.
BTR homes are purpose built residential properties designed for rent rather than sale, and the sector has gained government support in recent years to help combat the housing crisis.
Hazel Sharp Webb, head of private rented sector and BTR at property firm Rettie & Co, which conducted the research, said: “The numbers show that Scotland is not punching its weight on build-to-rent, but at least we are now punching and the opportunity is huge.”
The firm’s figures show Glasgow has 1,795 BTR homes planned, including in areas such as Central Quay and Holland Park, while Edinburgh has significantly fewer in the pipeline at 1,198, including in Fountainbridge and India Quay.
There are currently plans to build 460 BTR properties in Aberdeen and a further 228 in Dundee, as the Scottish Government targets the delivery of more than 50,000 affordable homes by 2021.
House prices in Scotland are continuing to rise. According to data released by the Register of Scotland, the average price of a Scottish property in April this year was £148,952, an increase of 5.6 per cent from the same month in the previous year and a sustained average monthly rise since March 2016.
Sharp Webb said: “Investor interest is starting to accelerate and there is much more of an acceptance of BTR from Scotland’s local authorities who now realise it is not just a premium product, consistent with the Scottish Government which is fully behind BTR and its ability to help solve the chronic undersupply of housing in this country.”
Last month, Rettie & Co’s development services division was appointed by regeneration group Places for People to support in the delivery of 1,000 affordable homes across Scotland, a development made possible following a long-term loan of £47.5 million from the Scottish Government.
John Boyle, director of research and strategy at Rettie & Co, cited increased earnings and a stable economy as key drivers for a surge in demand for BTR properties in Scotland, with political concerns that previously held investors back now beginning to fade.
He said: “BTR has arrived as a tenure in Scotland, we’ve still got a way to go but we’re now up and running. The increasing number of schemes across Scotland is particularly pleasing to see we are beginning to make this sector work.
“Favourable demography, solid economic growth, rising earnings and higher education provision are set to drive BTR provision, while investor concerns around political uncertainty and legislative change are dissipating.”