The surge in the Buy to Rent (BTR) sector, in the context of rising numbers of unsold housing stock, offers new opportunities to not only investors, but the supply chain too. Louise Walters, commercial director at flooring contractor Designer Contracts, explains further.
In recent years, England has witnessed a notable increase in the number of unsold housing ‘stock plots.’ A phenomenon indicative of various economic, societal, and housing market factors, it is one which has seen many developers change tack. Instead of regarding unsold houses as an ‘inventory surplus,’ they are now marketing them as ‘buy to let opportunities.’
To understand this strategic shift, it’s worth looking first at the background to this rapidly evolving market.
Economic uncertainties stemming from global events such as the Covid-19 pandemic have left potential buyers cautious. Job security concerns, the increased cost of living and fear of another economic downturn have led many to postpone their plans to purchase homes.
Rising property prices and higher mortgage costs have played a part, resulting in a decline in demand, particularly among first-time buyers. In certain areas, developers are seeing excess stock that is taking longer to sell.
All this, plus an increasingly mobile workforce has led more people to opt for renting rather than buying homes. And builders have been quick to recognise that any unsold, or so called ‘stock plots’ represent a new opportunity for the BTR market.
Figures from the British Property Federation (BPF) say the number of completed BTR homes increased by 13% in 2022 to 88,100 units – despite market conditions slowing development activity. The result is more and more new builds being marketed directly at investors whose primary aim is to generate rental income. And in order to do so quickly and efficiently, they require turnkey solutions to support their purchase.
As one of the more agile suppliers to the new build sector, offering not just flooring solutions but furniture and lighting packs and made-to-measure blinds and curtains, this evolving market is another opportunity for suppliers like ourselves to further develop partnerships with the new build sector.
More adept, customer-oriented businesses recognise that a one-stop-shop offer is a win-win solution for the developer who simply wants to sell its inventory – and the investor who wants a fuss-free financial transaction.
Also important to servicing this emerging buyer sector is having depth and breadth of immediately available stock. The BTR market is both swift and demanding: property investors need to conclude both the sale and interior fit out in rapid order so they can make the earliest possible return on their investment.
In short, it is in the interests of us all to work together to tackle the evolving dynamics of the property market so that developers, suppliers and investors all continue to thrive. Developers have already recognised that unsold houses can be marketed differently; savvy suppliers are spotting the opportunity for one-stop-shop solutions; and investors themselves are seizing the chance to add to their portfolio where easy picking packages are available.
It’s a complex landscape, but one that we can undoubtedly navigate together, for everyone’s benefit.