The UK’s build-to-rent (BtR) sector is experiencing a paradigm shift. Social value is increasingly taking centre stage and investors are recognising it as a key determinant of long-term asset value.
The desire to create homes that place social value at their core – to foster a sense of community for residents and the surrounding area – has become fundamental to build-to-rent (BtR) strategies. The ability to engage locally, curate the right mix of amenities, and deliver real service is critical.
Investors committed more than £5.6 billion to BtR in the UK during 2024. The market’s projected growth means it provides a huge opportunity to shape communities and positively affect the lives of those living in them. The UK’s BtR sector currently accounts for approximately 2% of the UK’s rented residential market. If the UK follows a similar growth trajectory to more established markets, like Germany and the US, BtR’s market share could grow to over 30%. The potential is significant.
Building social value in thriving communities
It wasn’t that long ago that the environmental element of environmental, social and governance (ESG) practices felt unquantifiable for real estate investors. But the real estate industry has made great strides in establishing processes to quantify the impact of environmental initiatives. Similarly, we are now seeing the benefits of placing greater emphasis on accurately measuring the impact of social value.
A recent study by the Quality of Life Foundation found that 82.2% of BtR residents said that their homes positively affected their health and wellbeing. The positive impacts came from the quality of the outdoor green and natural spaces, the provision of high-quality spaces for people of all ages, inclusive and engaging events and activities, and improved mobility and connectivity.
A thriving community also requires social wellbeing, environmental responsibility, civic engagement, economic opportunities, access to education, and inclusivity. Such a neighbourhood fosters a sense of belonging and reduces isolation, regardless of demographics. Closer proximity to neighbours and amenities encourages interaction, forming friendships and networks that combat loneliness and benefit health.
We aim to develop rental housing in the UK on under-utilised brownfield sites, which means that additional jobs, local spending and new tax generation will contribute to the local economy. One-off levies are also paid to local authorities to fund schools, doctors and local infrastructure, but the benefits extend beyond the purely financial and economic. Socially, the development of BtR on brownfield land can enhance local amenities, enhance neighbourhood aesthetics, and cultivate more sustainable and equitable communities. BtR homes also provide much-needed additional housing.
Housing developments intended for home ownership can also build communities. But the structure and management of build-to-rent (BtR) developments – where owners are invested for the long term – offer distinct advantages that enhance the formation of stronger, more interconnected communities. The emphasis on long-term capital investment in BtR developments aligns with the objective of creating stable, thriving communities, where residents are inclined to remain for extended periods . BtR housing has a wider impact on the community than just providing homes.
BtR properties that work for communities
Each BtR development must be carefully considered to ensure it has a positive neighbourhood impact. The intensity and population densities of BtR schemes in urban areas mean they can act as ‘super-communities’, developing social values that spill into surrounding neighbourhoods.
A sense of community within BtR developments provides several advantages for residents.
Figure 1. BtR considerations and practical initiatives
| BtR considerations |
Initiatives |
|---|---|
| Considerate unit design |
Sensitive building design significantly affects living environments. Choosing appropriate materials, soundproofing well, enhancing energy efficiency, maximising daylight, and ensuring access to green spaces improve resident satisfaction. |
| Resident services, safety and security |
On-site services, such as maintenance, parcel storage, security and other concierge services. Knowing neighbours increases vigilance, which can deter crime and enhance safety. Community-building initiatives like neighbourhood watch programmes or social events can further strengthen bonds between residents. |
| Practical support and assistance, technology and connectivity |
Residents can share resources or help with errands, benefiting individuals with disabilities, elderly residents, or those facing temporary challenges. Community initiatives like skill-sharing workshops, food co-ops, and community cafes can foster self-sufficiency. Dedicated smartphone applications for reporting maintenance issues, resident communications, facility reservations, event booking, and local recommendations. |
| Community events |
Barbecues, fitness classes, themed parties, wine tasting and seasonal events. Organised outings to local attractions and day trips. |
| Outdoor communal spaces |
Carefully designed outdoor spaces for the exclusive use of residents and their social network. |
Resilient BtR strategies for investors
Creating a thriving community is mutually beneficial for both residents and investors.
For residents, suitable, sustainable housing is a catalyst for promoting social values. BtR developments with vibrant communities gain positive reputations. Happy residents are more likely to share their experiences with friends and family. This attracts new residents organically, who want to be part of a vibrant community.
For property owners, happy residents are likely to stay longer, reducing turnover in the building. This is significant for BtR properties, given the importance of sustaining net-operating income. A lower turnover of residents means fewer costs related to marketing, cleaning and general maintenance in preparation for new residents. Implementing John Lewis Partnership’s unique customer-centric operating model has yielded positive financial returns on the assets it operates with Aberdeen Investments. The next phase of our joint venture will see the redevelopment of existing assets , with a focus on strengthening the long-standing ties to the communities in which they operate.
Final thoughts…
As cities evolve and people’s needs change, one thing is consistent: the need to protect and nurture our thriving communities. By taking a long-term view and thinking about the genuine impact we can make on people’s lives, positive financial returns and resilient incomes are sure to follow.