19 February 2024

The Emergence of Single-Family Housing SFH in the Build to Rent Sector

By Build Zone
Single-Family Housing SFH

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In recent years, the UK rental landscape has witnessed a significant shift with the rise of Single-Family Housing (SFH) in the Build-to-Rent (BTR) sector. This trend marks a departure from traditional homeownership and standard rental models, leaning towards a unique fusion that offers the best of both worlds: the privacy and space of a single-family home with the flexibility and convenience of renting.

The concept of SFH in the Build-to-Rent sector primarily emerged as a response to changing housing needs. With an increasing number of families and professionals seeking more space, privacy, and stability than typical multi-family units, the BTR model became an attractive alternative. The fluctuating housing market, economic uncertainties, and the evolving preferences of the millennial generation further fuel this demand.

Recent research conducted by Savills has shed light on such demographic preferences and motivations behind the growing interest in Single-Family Build to Rent homes. This study reveals that young families predominantly drive the demand for these rental properties, with a notable 54% increase in interest in suburban locations. Despite this surge in suburban demand, the construction of new homes has remained predominantly focused on urban markets, accounting for 35%.

Key findings from Savills’ research highlight that local amenities are the top priority for Single Family Housing (SFH) tenants. Essential factors such as proximity to schools, green spaces, and healthcare facilities are crucial in their decision-making process. The study also underscores the importance of transportation connectivity in suburban areas, where access to major road networks is vital. This is particularly significant as most workers in these areas rely on cars for their daily commute.

In essence, the research points to a significant gap in the market: while young families are increasingly seeking single-family rental homes in suburban settings that offer both community amenities and transportation convenience, the current supply is still heavily skewed towards urban developments. This mismatch suggests a potential opportunity for real estate developers and investors to cater to this underserved segment.

“Savills highlights that SFH is popular with the younger demographic of the private rental market. Almost 90% of occupiers are under 45 compared to 51% across the whole PRS and 57% for new builds.”

Critical Characteristics of SFH Build-to-Rent

Purpose-Built Rentals: Unlike traditional rental properties, which might be individual homes initially built for sale, SFH BTR homes are designed and constructed to be rented out.

Single-Family Homes: These properties are stand-alone, typically with gardens and outdoor spaces, offering more privacy and space than typical multi-family rental units like apartments or maisonettes.

Professional Management: Professional property management companies often manage SFH BTR communities, ensuring consistent quality and maintenance across all homes.

Community Amenities: Many SFH BTR developments are designed as communities, complete with shared amenities like parks, fitness centres, community pools, and sometimes retail spaces.

Suburban Locations: While not exclusively so, many of these developments are situated in suburban areas, offering a balance of space, community, and accessibility to urban job markets.

Why SFH Build-to-Rent is Gaining Popularity

Changing Housing Needs: As people seek more space, particularly in the wake of trends like remote work, SFH BTR offers a viable alternative to urban apartments or the financial commitment of buying a home.

Economic Flexibility: Renting a home provides flexibility for individuals who cannot afford or do not wish to commit to a mortgage, especially in uncertain economic times.

Demographic Shifts: Millennials entering family life and baby boomers looking to downsize or avoid home maintenance responsibilities find SFH BTR a suitable option.

Investment Appeal: For investors and developers, SFH BTR projects represent a stable revenue stream with a growing demand, making it an attractive investment opportunity.

The rise of the SFH Build-to-Rent model is reshaping the housing market in several ways. It’s providing an alternative pathway to living in a single-family home, particularly in markets where buying a home is becoming increasingly unaffordable. Moreover, it’s stimulating new types of real estate development and investment, focused on long-term rental income rather than just home sales. As this sector continues to grow, it will likely have a lasting impact on housing trends, urban planning, and real estate investment strategies.