黑料专区

Operators, suppliers and developers in the growing build-to-rent (BTR) sector gathered at the UK Apartment Association鈥檚 (UKAA鈥檚) annual BTR Expo in London on 20 April, where Property Week sat down with UKAA chief executive Brendan Geraghty and Gillian McLees, chair of UKAA Scotland and director of BTR at Scottish estate agency Rettie & Co.

While Geraghty admits insights from discussions at the event were not 鈥渄ramatic鈥�, he says they helped attendees 鈥渏oin the dots more coherently so a more tangible and constructive conversation can take place鈥�.

Economic environment

Geraghty adds that although the current economic situation is 鈥渢ricky鈥�, the 鈥渧iability of BTR is challenging even in good conditions鈥�.

He says: 鈥淓verything鈥檚 changing 鈥� the cost of living is moving, construction costs are starting to stabilise, inflation looks like it鈥檚 going up. There鈥檚 an awful lot of moving parts. It鈥檚 challenging, and I suspect it will remain challenging for a little while yet.鈥�

However, he adds: 鈥淭he fundamentals on BTR are 100% sound and haven鈥檛 changed at all. There are headwinds at the moment, and there are always going to be difficult patches. But everybody鈥檚 confident that the industry will succeed. We had 拢1.1bn invested in Q1 alone.鈥�

One of the biggest hurdles, according to McLees, is the rent control measures put in place in Scotland. Earlier in the week, Rettie & Co published a report on behalf of the Scottish Property Federation that revealed the majority of investors found the Scottish BTR market 鈥渦nattractive鈥�, with some finding it completely 鈥渦ninvestable鈥�.

McLees says the government needs to do more to attract investors back to the Scottish BTR market, but that 鈥渇eels like pushing water up a hill right now鈥�.

She adds: 鈥淲e鈥檙e trying to find solutions to make sure we can explain what鈥檚 happening in Scotland, giving the investors some certainty and making us less of a risky option.

鈥淭here are already a number of uncertainties in Scotland, such as the independence debate. Scotland is already higher up the risk matrix from that point of view, but the opportunities were large enough to combat that.鈥�

She adds that the government鈥檚 decision to add the rent cap without consultation resulted in a 鈥渃onsequence where the money is leaving Scotland and going elsewhere鈥�.

Delivery potential

Geraghty says that throughout the UK, there is still massive potential for growth in the sector, claiming there is capacity to deliver up to two million homes in the UK.

鈥淲e鈥檙e sitting at about 80,000 homes, but we have the potential to deliver two million,鈥� he says. 鈥淲e have more money than you can shake a stick at [from people] who are interested in doing that.鈥�

Geraghty also points out that BTR is not fulfilling its potential to be recognised for its social value, particularly when it comes to the age-old chestnut of trying to secure planning.

He says planning is by far the biggest obstacle to achieving the two-million-homes figure.

鈥淲e need to turn our attention to really develop, nurture and articulate the social value to ourselves, the industry, government, society at large through local authorities and, ultimately, through to the customer.

鈥淏TR needs to be recognised for what it is, which is not the same for the PRS [private rented sector] or for-sale.鈥�

ESG

Throughout the discussion and the BTR Expo, the most consistent area of debate was environmental, social and governance (ESG). With the industry gearing up to meet the government鈥檚 sustainability and net zero targets, McLees argues that 鈥渨e don鈥檛 necessarily have to push it鈥�.

She adds: 鈥淚鈥檓 not finding it [ESG] a difficult sale. Most of our big corporate and institutional funded landlords want it, and our customers expect it. We just need to build the ESG agenda into our models early and deliver it.鈥�

Geraghty agrees that investors are looking at the BTR market with 鈥渁n ESG mindset鈥�, claiming that institutional investors are more aware of the 鈥渞eputational damage鈥� of not doing so.

鈥淩eputational damage is a big deal in their approach. Because of the influence of that type of legacy thinking on the BTR process, it鈥檚 clear, and we can see it coming in; it鈥檚 only going to get stronger.鈥�