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BDC 318 : Jul 2024

ascend properties

Build to rent planning applications increase by 52% in pandemic year

Research from build to rent specialists, Ascend Properties, shows that the UK build to rent sector has performed well during the pandemic year with planning permission requests rising by 52%. Build to rent (B2R) is becoming a driving force in the UK new-build market, and while the COVID-19 pandemic has slightly slowed what looked to be a very impressive rate of growth, the B2R market has done an admirable job of recovering from the early shock to maintain positive momentum throughout a challenging year. Planning permission applications are a useful way to measure UK B2R performance because they show exactly how many developments are being conceived, how many of those result in permission being granted, and how many are either refused or withdrawn by the applicant. It enables us to examine both developer appetite and local authority willingness to push for a B2R boom in this country. The figures show that the pre-pandemic peak for B2R planning application approval came in Q2 2019 when 6,682 applications were submitted. Of these, 4,151, an all-time high of 62%, were granted full planning consent while 2,531, an all-time low of 38%, were either rejected or voluntarily withdrawn. By the time the COVID-19 pandemic began in Q1 2020, applications had risen to 7,900 submissions but the amount being granted was down to 52% while rejections and withdrawals rose to 48%. Q2 2020 brought a predictably significant slump for the sector. While the total number of B2R applications only fell slightly to 6,530, the approval rate dropped significantly to just 39%, while rejection and withdrawal jumped to almost 61%. However, from this point forward, the B2R sector quickly returned to a steady rate of growth. By Q1 2021, after a year of pandemic and lockdown, the B2R sector showed signs of being on the brink of a post-pandemic boom. An all-time high of 11,975 planning applications were submitted, up 52% on the year. Of these, 58% received full approval, a rise of almost 6% since the start of the pandemic, while 42% were either rejected or withdrawn, a drop of nearly -6% on the year. Managing Director of Ascend Properties, Ged McPartlin, commented: “It’s clear that build to rent is becoming the go-to choice for developers, with projects popping up both in major cities and smaller regional towns. “But what we’re also seeing is a clear uptick in willingness from local planning authorities to grant permission for build to rent developments. While developers sense high yield, low-risk opportunities, local authorities sense an opportunity to simultaneously meet the demand for new homes while rejuvenating and reinvigorating their economies and communities by introducing this new, dynamic way of living.” Table shows the ratio of UK BTR planning permissions granted and withdrawn during the pandemic, as well as the previous high for approvals (Q2, 2019) BtR planning application status Q2 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Pandemic Change Pandemic Change % Planning permissions granted – full planning consent gained 4,151 4,114 2,575 4,791 5,192 6,937 2,823 69% Withdrawn / refused 2,531 3,786 3,955 3,563 3,896 5,038 1,252 33% Total – estimated 6,682 7,900 6,530 8,354 9,088 11,975 4,075 52% Planning permissions granted – full planning consent gained % 62.1% 52.1% 39.4% 57.3% 57.1% 57.9% 5.9% Withdrawn / refused % 37.9% 47.9% 60.6% 42.7% 42.9% 42.1% -5.9% Data sourced from Gov.uk, Gov.scot, Gov.wales and Infrastructure-NI                  

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Never Knowingly Under Built – An Opinion Piece by Ged McPartlin, Managing Director of build-to-rent specialists Ascend Properties

News reached us at the weekend that British retail institution John Lewis is expanding its range of wares from haberdashery, electrical goods and Waitrose goodies to houses. Yes, you will soon be able to pick out a place to live from their stores and not just with regard to the things you put in it. This is a sensible initiative for a 157-year-old company that realises that times are changing and that department stores may not be the destination of choice for new generations any longer, given the indefatigable rise of Amazon etc. Faced with such challenges firms can either ‘do a Woolworths’ and just die in the face of adversity or they can pivot. John Lewis and their employee partners have chosen the latter with the announcement that they will be building 10,000 homes on company land over the next ten years. Interestingly, these are not planned to be built as resales. John Lewis is not looking to compete with the likes of Bovis, Persimmon nor Redrow. No, these properties are for the long haul as build-to-rent homes that will provide rental income to the company Infinitum. Additional, solid revenue that will contribute quite significantly to their P&L and will be backed by the asset value of the buildings themselves for balance sheet strength. You have to applaud the boldness of this scheme and its product market fit from existing resources yet also its pure simplicity. Which got me to thinking, what if other British based firms were to innovate in this way too? How many dwellings could be created for the country’s growing number of enthusiastic renters and how lucrative would this be for struggling firms that are perhaps now ‘land asset rich’ yet ‘bottom line poor’? Some of the UK’s biggest landowners are, unsurprisingly, housebuilders given that they jointly own or control some 700,000 potential building plots. But other super-sized players inadvertently include such examples as Tesco, who apparently own over 11,000 acres around their existing stores or assets that have been purchased with the intention of building new ones. The fag packet that I have just reached for to work out how many homes that represents shows that over 220,000 homes could be provided from Tesco’s space, based upon an average of 45 dwellings per hectare as is about the average. That’s quite some solution and brings new meaning to the strapline ‘Every Little Helps’. And it’s also quite some income at a typical monthly rent of £900+ per month – equating to perhaps £2billion a year in top-line revenue. I’ll leave you with this inexhaustive list of UK landowners with which to boggle your mind over what I suggest the future of build-to-rent could be. Note that the housebuilder I have included is one of the smallest holders of all, comparatively (Source: ABCFinance.co.uk). Isn’t it amazing how solutions are sometimes just sitting there just waiting to be implemented? Landowner Land Acreage Owned in England Ministry of Defence 397,000 United Utilities 140,100 Duke of Westminster 140,000 Duchy of Cornwall 130,600 Network Rail 100,500 Church of England 73,000 Severn Trent 51,700 Sir James Dyson 33,000 Homes England 19,300 Taylor Wimpey 14,600 Tesco 11,000 Source: ABCFinance.co.uk    

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