SFR Can Create The New Neighbourhoods The UK Needs And The Market Is Growing

The UK’s single-family rental market is growing fast. There are currently 15,000 homes in construction and planning, which could lead to 30,000 operational homes by 2027 and 70,000 by 2032. SFR properties will grow from being 12% of the build-to-rent market to 18% in the next 10 years.

While this growth provides huge opportunities for developers and operators, it must be accompanied by a focus on professionalism, Placefirst CEO David Mawson said. Placefirst designs, develops and operates BTR and SFR neighbourhoods across the UK. 

Bisnow spoke to Mawson about the expansion of SFR and how Placefirst maintains its high standards. 

Bisnow: The SFR market is growing, but what is it and how can growth be increased to meet demand?

Mawson: SFR is still relatively new and it’s quite a disjointed market at the moment. There’s a lack of clarity between buy-to-lets, which are private landlords and the institutional SFR model. The industry has some way to go to effectively communicate what it wants to achieve with SFR. We’ve got to work as a sector to raise the profile and understanding of what it is and who we’re providing homes for. 

If we do that, there’s a real opportunity for the industry. We are moving into an era where people choose to rent. Last year, we know that 34% of the people who left our schemes were buying their own home. This year, that’s only 21% of people. With increased mortgage rates [and] the high costs of repair work, people see renting as a viable option. 

They also increasingly want to rent a high-quality home, and they want to have it instantly. So our focus is on providing high-quality homes with good support metrics, maintenance and compliance. We create communities where people want to live.

Bisnow: Do you believe demand for SFR will continue to increase?

Mawson: Without a doubt. Take the fact that at the moment, 22% of our residents are NHS staff. We didn’t target key workers, but they clearly view SFR as a viable option for a high-quality home that is ready from day one.

The market for institutional SFR products is also growing as a result of tax changes for buy-to-let landlords and the upcoming changes to energy performance certificates. At our new-build properties, we’re achieving an EPC of B or above. For refurbishments, we take properties from F to C or above.

This improvement in energy-efficiency isn’t just good in terms of EPCs. A customer will have a better understanding of what they will pay each month in bills, which is another draw to renting a home. 

Bisnow: What is the scale of the schemes that you’re looking to create?

Mawson: Our schemes range from 50 to 300 units and range from apartments to houses and bungalows. We create a mixture of house types and each neighbourhood is bespoke to local housing demand, including two-, three-, four-bedroom homes. Families can upsize and downsize as they need.

At the moment, we’ve got 300 units in construction and 1,000 units either approved or in planning. Initially, we focused on the north west, then moved to the North East and Midlands. We now see ourselves operating across the UK, with the exception of inside the M25. 

Bisnow: How do you assess potential schemes and opportunities?

Mawson: When we consider a scheme, we need to know it will be sustainable. We look at whether there are schools nearby, transport and jobs. We consider whether we can maintain it correctly. We always look to develop homes that meet demand in the area.

To that end, we’re constantly updating our product, getting feedback from customers. We know that what we delivered three years ago might need to be different today. It’s important to create smart schemes that can be upgraded. 

Take the fact we’ve recently partnered with Yardi to create a new resident portal and app. It makes it easier for customers to find all relevant information relating to their home, access their documents, communicate with us and so on. We want to make sure we work with residents and add value in a way that helps them get the best out of their home. 

Bisnow: If demand for rental homes is growing, should local authorities be doing more to encourage SFR schemes? 

Mawson: We’re actively speaking to local authorities about this. There are three reasons people live in our homes: either they choose to, they can’t afford to buy or they don’t qualify for social housing. So there is clearly a need for these homes.

Also, because we offer stable and secure tenures, we attract good residents and workers to the area. We need to work alongside councils to support areas in need of economic growth.

We often see that we build neighbourhoods and invest in an area, other investments follow. We create a ripple effect. And we know we contribute to local economies. In Liverpool, we know our residents spend £1.7M in local shops and businesses.

Bisnow: What can the industry do to make sure that schemes meet local needs?

Mawson: I would welcome some kind of regulation in the BTR and SFR sector, to hold developers and operators to account. For example, all our employees are DBS checked. We approach management in a professional manner, and we really care about our residents. Properties must have the correct inspections and certification, which professional landlords provide.

The growth of SFR presents a huge opportunity for the industry, but people shouldn’t think it’s an easy market. We have a track record that shows we know how to create great neighbourhoods that people want to live in for the long term. 

Bisnow: What makes a great scheme?

Mawson: A scheme is great because of the people, both our team and the residents. If we look at our average scheme, the age range is from 20 to 70. These people integrate and create communities. People from many nationalities work and live together in harmony for the long term. 

We constantly make sure that we’re delivering what customers need. During the pandemic, that was a home office. Now, people need electric car charging points. Our team constantly thinks about what comes next because key to our residents is security of tenure.

This article was produced in collaboration between Placefirst and Studio B. Bisnow news staff was not involved in the production of this content.

Studio B is Bisnow’s in-house content and design studio. To learn more about how Studio B can help your team, reach out to [email protected].