Recently, it was announced that US behemoth Atas Residential had forged a build-to-rent venture in conjunction with Wildheart Residential management in the UK. This marks the American firms’ first major push into the British marketplace, while also showcasing the potential that currently exists in the buy-to-rent sector.

This is an interesting trend in the UK property market, particularly considering the increased stamp duty and tax levies being aimed at private landlords. In fact, it reveals an underlying issue concerning supply, as the market continues to suffer from a dearth of available properties listed for sale.

A Look at the UK Property Market: The Rise of Buy to Rent and the Reasons Behind This

 Over the course of the last 18 months, property prices in the UK have risen at an exponential rate. This growth has been vastly disproportionate to inflation and national earnings, creating a market where far fewer citizens can afford to buy. As a result of this, we have seen a dramatic increase in the the number of renters, as people look for a short-term alternative to buying.

This debilitating cycle can be traced back to a fundamental lack of supply, as there are simply not enough available properties to fulfil demand and sustain a balanced marketplace. The statistics that support this are quite insightful, as while the UK is required to build an average of 300,000 houses each year to meet the prevailing demand they have not constructed more than 200,000 in more than a decade.

While this has created a demand that has fuelled the buy-to-rent market, however, those within the sector have been quick to capitalise. Outlets such as Allsop have advertised this demand to interested parties, for example, while offering in-depth and actionable advice about how investors can participate.

Similarly, initiatives such as the Build to Rent scheme in the UK have helped private sector firms to minimise the risk associated with individual construction projects, while optimising returns and sharing accountability with government agencies.

The Bottom Line: What Else Can We Draw from the Rise of Buy to Rent?

While the large-scale, international collaboration between Atlas and Wildheart Residential may be a fundamental symptom of an ailing property market, however, it is not the only one. We have also seen a distinct rise in the demand for alternative housing too, from flat pack and manufactured structures to motor homes. In fact, motor home sales increased by 20.4% in the year ending March 2016, translating into £150 million in retail value and signalling a huge shift in the outlook of buyers.

As we can see, a lack of available housing (and the inability of private sector firms to build the required amount of properties per annum) is changing the perception of buyers and forcing them to seek out more innovative and affordable options. This is a trend that is likely to continue for the foreseeable future, at least until more properties can be built and the market can develop a sense of equilibrium. Even then, there remain concerns about the suitability of new-build houses, which are increasingly compact and unable to meet the demands of modern home-owners.