The economic factors which have contrived to see a surge in the Buy to Rent (BTR) sector along with a rising number of housing stock plots – properties which remain unsold by developers – are not only offering private and corporate investors new opportunities, but the supply chain too. Louise Walters, commercial director for Designer Contracts, explains.
In recent years, England has witnessed a notable increase in the number of housing stock plots. A phenomenon indicative of various economic, societal, and housing market factors, it is one which that has seen many developers take a change of 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 too. This has resulted 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 13% in the year to July to 88,100 units – despite market conditions slowing development activity.
It’s a complex scenario but 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 a further 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 soonest possible return on their investment. It’s one of the reasons we carry £3 million worth of stock at our central distribution centre – we understand the urgency involved.
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 we can undoubtedly navigate together for the befit of all.