Research points to market boom for Birmingham build to rent

Birmingham achieved the second highest Build To Rent investment volume across UK cities in 2021, with investment activity totalling £553m.

Currently, there are 4,390 BTR units under construction in Birmingham, with just two schemes set to complete in 2022.

Planning permission has been achieved for a further 9,981 BTR units; an additional 25 schemes are currently in the planning stages.

New research from Gerald Eve suggests that Birmingham’s build-to-rent (BTR) market is set to expand rapidly in coming years. This research follows the release of Gerald Eve’s research into Manchester’s BTR market last year.

The Birmingham Development Plan (BDP) 2031, adopted in 2017, states the need for an average requirement of 2,550 homes per annum, between 2011 and 2031. But, in the last decade, the city’s housing completions have fallen short of annual targets, leaving a deficit of 14,230 homes. Birmingham City Council has concluded that, over the next ten years, housing delivery must be scaled up dramatically to meet the needs of Birmingham’s growing population, and Birmingham’s Build To Rent sector is well placed to make a significant contribution to the provision of new homes.

Gerald Eve estimates that the potential pool of prospective Build To Rent residents in Birmingham is significant and growing. People aged 25 to 45 are the most likely to demand the style of housing that BTR schemes can offer, but existing schemes attract all ages. Across Birmingham, the estimated population of people aged 25 to 45 accounted for almost 30% of the city’s total population in 2020, and is expected to grow by a further 1.6% by 2025 – well above the overall UK average of 0.8%.

Bobby Barnett, Partner at Gerald Eve, said: “House prices in Birmingham have risen sharply since 2020, with the housing affordability ratio in the city currently standing at 7.6 times the annual median wage. As a result, we will see more and more young professionals and families choosing to rent rather than buy, driven either by cost or by preference.”

Investors and developers are waking up to the opportunity presented by Birmingham’s BTR market. Investment in BTR schemes soared to £553m across six transactions in 2021 – an increase of 40% compared with the figure for 2020 (£394m). BTR investment volumes in Birmingham in 2021 were more than double that of Manchester and second only to London. However, Gerald Eve concludes that, whilst there are 4,390 BTR units currently under construction in Birmingham, only two schemes are set to complete in 2022. A further 10 schemes (totalling 9,981 units) have planning permission, and there are 25 schemes currently going through the planning stages.

Charles Boyes, Partner at Gerald Eve added: “Birmingham is primed for a BTR boom in the near future. The city’s growing demographic of young people combined with the rising cost of housing make its BTR market an attractive proposition for investors and developers, and there are a number of developments already under construction. However, only two are set to complete this year, and there is plenty of room for more schemes in the development pipeline, especially given Birmingham’s woeful housing deficit of over 14,000 homes. The increased delivery of BTR schemes is also in line with Birmingham City Council’s aim to raise the quality of homes available in the private rented sector.”