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Abstract

Chinese

Build-to-Rent (BTR) developments have expanded rapidly in the UK since 2013, often advertised as providing better quality rented accommodation for university-educated Millennials than available elsewhere in the private rental sector. However, the implications of this type of housing development, and especially its affordability, are poorly understood at the city scale, partly due to a lack of evidence of where these developments cluster and what they add to the housing stock in terms of property type, amenities and cost. This article draws on data relating to 373 BTR developments in London (representing over 40,000 housing units) to show that developments are clustered where transport-related infrastructural investments have opened ‘rent gaps’ that can be exploited by developers. Exploring how these BTR schemes are marketed, the article shows that this accommodation is typically provided through new short-term ‘subscription services’ which allow developers to rent property at a premium. Questioning whether BTRs really add affordable ‘local’ homes to the city, the article concludes that BTR provides ‘quick-fix’ rental accommodation which is doing little to solve London’s housing crisis. We focus on the London BTR market and how the expansion of this housing type is reshaping the sociospatial geographies of the city.

Keywords

Build-to-Rent built environment displacement finance/financialisation gentrification housing London planning

Introduction

The housing crisis that has enveloped many Western nations is particularly acute in the UK, and especially in London. Despite recent drops in house prices following interest rate rises, rents in the private sector continue to increase: one recent estimate suggests that the median cost is more than half the average income for workers (Trust for London, 2023). BBC reports suggest that more than 20 applicants view the average rental listing, with some prospective tenants offering more than the asking price to secure the property (Peachy, 2023). It is in this context that the government has encouraged the production of more accommodation to ease the housing crisis, with selective deregulation of planning powers designed to encourage the production of new homes (Chng et al., 2023), but this has been critiqued for its emphasis on quantity over quality (Ferm et al., 2020). Rather less has been said about the government’s simultaneous promotion of Build-to-Rent (BTR), boosted by a £1 billion BTR fund supporting the development of ‘quality’ new-build developments of more than 100 units. Government promotion has proved pivotal for the BTR sector, which is thought to be having a marked impact on London’s housing market (Nethercote, 2020).

Since this form of development is still relatively new to the UK, and data has been hard to come by, this article interrogates the BTR market in London as a whole, examining whether what is delivered deviates from advertised hallmark qualities, and the implications this might have for housing choice. We therefore have three aims: first, to map the distribution and characteristics of London’s BTR schemes; second, to examine whether BTR can offer a long-term solution to London’s housing crisis; and, third, to explore the relation between BTR and gentrification pressures in the capital. To achieve this, we employ an extensive, novel primary dataset created by a housing analytics firm as well as a qualitative appraisal of marketing materials and tenant reviews – supplemented by broader small-area government housing market data – to shed light on a rapidly growing but poorly understood development model with the potential to significantly impact urban life.

Build-to-Rent

As their name implies, Build-to-Rent developments are large, new-build properties designed for the private rental market. BTR developments are distinguished by the fact that they are managed and let, as well as often developed, by a single organisation. For investors, such as risk-averse pension funds (Brill and Durrant, 2021), BTR provides an attractive mix of both an underlying asset and an ongoing revenue stream. BTR developments are also often distinguished by the fact that they promote shared ‘lifestyle’ facilities at a level above those associated with the traditional block of flats; these amenities can include communal areas, private screening rooms, games rooms, gyms and rooftop terraces. These are presumed to appeal to a young, professional, post-student demographic seeking an ‘urban experience’, one that is happy to trade space for location.

Beyond understanding who occupies BTR, it is important to place BTR within the broader context of housing inequality to understand how these developments may contribute to disparities in access to secure and affordable housing. In theory, BTR provides an alternative to owner-occupation and buy-to-let models which make housing unaffordable for many; however, BTR also represents a ‘scaling up’ of institutional investment that is quantitatively and qualitatively distinct from piecemeal buy-to-let and small-scale landlordism (Nethercote, 2020), leading to suggestions that it is making entire neighbourhoods less affordable (Carvalho et al., 2023). This potentially implicates BTR in investor-led, ‘fifth-wave’ gentrification (Christophers, 2022), although the evidence for this remains scant due to the absence of grounded studies of the location and impacts of BTR.

This article hence focuses on BTR in London, exploring how this new asset class is changing the housing landscape of a world city. While existing work has focused on the discursive production of BTR as an investable asset (Brill and Durrant, 2021), and its relation to the financialisation of housing (Brill and Özogul, 2021; Christophers, 2022; Nethercote, 2023), our focus is on the features of the London BTR market and how this expanding housing type is reshaping sociospatial divides in the city. We sidestep finer-scale questions of quality (state of repair, gross internal area, quality of fixtures and fittings), drawing instead on data of 40,041 units to examine the location, affordability and communal facilities offered by these developments. In doing so, we aim to contribute to debates concerning the contribution of new, alternative housing typologies in cities where property is becoming thoroughly financialised and often unaffordable.

A new market niche?

The UK BTR sector is often presented as an alternative to traditional private rental sector (PRS) accommodation, which is routinely described as offering poor-quality and insecure tenancies (Brill and Durrant, 2021). The house in multiple occupation (HMO) sector is seen to offer low-quality accommodation suitable only for short-term occupation, with unrelated adults occupying properties lacking security or privacy. In contrast, as purpose-built co-living developments, BTRs offer self-contained ‘accommodation for adults’, usually in large, multiple-occupancy blocks with a mix of ensuite facilities and shared spaces providing opportunities for interaction with others (Harris and Nowicki, 2020: 592). This format is presumed to appeal to singles or couples under 40, including ‘Millennially minded’ graduates, key workers and highly mobile urban professionals (Raco and Brill, 2022). However, most BTRs often offer longer assured tenancies than are found elsewhere in the PRS (three years versus one year), but with some flexibility evident: the majority do not charge service fees (above and beyond rent) for services such as broadband, residential lounges or security (though use of on-site gyms and cinemas, where present, could exist on a membership basis).

Nationally, BTR has strong links to the development of purpose-built student accommodation, a lucrative sink for capital following the post-1992 expansion of higher education (Hubbard, 2009). This resulted in multiple student-only residential developments at the heart of ‘student cities’ such as Leeds, Manchester and Newcastle, where the traditional HMO market was perceived unable to keep up with student demand. In London, however, BTR emerged as both a legacy of the 2012 Olympics, with Stratford’s East Village being an early exemplar (Bedford, 2019); and as a result of the conversion of (vacant) office space under permitted development rights (PDRs) (Ferm et al., 2020). Within London, one in five homes completed in 2020 was a BTR unit (Isherwood, 2021), and the capital represents over half of the UK market (Scanlon et al 2018), making it a critical case study. Since 2018, BTRs have been a recognised asset class in the National Planning Policy Framework and, as of 2020, have accounted for more new homes in London than those sold directly to homeowners (Finnerty and Bicocchi, 2023). The growth in this sector is tied to wider changes in market regulation (Nethercote, 2020, 2023) and to the emergence of instruments, such as real-estate investment trusts (REITs), with sufficient liquidity to attract institutional investors (Horton, 2021). Significantly, BTR offers fast-track delivery, with the aim of developers getting ‘heads on beds’ quickly, offering an appealing alternative to the uncertainty and delay associated with public–private partnerships, arms-length housing associations or small-scale developer models (GLA, 2021).

According to Savills’ research for the British Property Federation (Whittaker et al., 2021), the sector has seen double-digit growth since the early 2010s and, across the UK as a whole, has provided over 180,000 units – equivalent to England’s 20-year average of annual net additional dwellings (MHCLG, 2020). Still, the UK’s BTR sector is in its infancy, and despite central government support, some developments have been refused by local authorities for their negative impact on the character of the area and concerns about the under-provision of affordable and family housing (e.g. see Planning Inspectorate decision APP/Q5300/W/21/3276466 concerning a scheme at Arnos Grove, Enfield). A succinct criticism is that BTRs constitute ‘business hotel[s] for middle-class Millennials’ (Macfarlane, 2018) that might have negative socio-spatial implications for communities due to exclusionary pressures and displacement effects (see Elliott Cooper et al., 2020) whilst adding value to foreign investors’ property portfolios. While BTRs often advertise higher standards, including shared amenities, nationally the rents are above local market prices by an average of 11% (Macfarlane, 2018; Skypala, 2019).

On demand: Right here, right now

Developers have advocated for BTR assuming that tenants require services that keep life as simple and immediate as possible (Carvalho et al., 2023) and that they have less interest in accumulating material possessions that require storage space (Harris and Nowicki, 2020). BTR properties are often fully furnished, with a 24/7 management team on hand for security and maintenance. Here, the provision of ‘high-quality’ furnishings and appliances may appeal to those recently arrived in the country, as might the flexibility of the contracts, which can range from six months to three years, making it attractive to the highly mobile. Since the rent can include utility bills and council tax, this further reduces the ‘hassle’ during transitions between residences (buildtorent.io). However, it might be more accurate to connect this demand to precarity, with the labour market increasingly structured around short-term, project-based contracts and ever-longer rites of passage into stable employment. Tellingly, while aspirations towards home ownership – and the security that it provides – remain high amongst younger people, their expectations of achieving this have dimmed (Clapham et al., 2014), suggesting that narratives of ‘plug-and-play’ housing that minimises ‘fuss’ should be taken with a grain of salt.

Another strand in the marketing narrative around BTR invokes the concept of ‘security’ to suggest that they are especially suitable for women and communities traditionally classed as ‘vulnerable’. This feature of BTR schemes could extend ‘genderfication’ processes – especially of childless working women – in different urban contexts (Lloyd, 2008; van den Berg, 2018). However, the securitisation of housing not only fails to address the multiple factors contributing to the fear of urban crime but also potentially exacerbates the divide between a de facto ‘gated’ community of residents and those living in the surrounding area.

BTR also potentially distorts local housing markets, ignoring demands for affordable and accessible housing: in London, where BTR is often part of a larger regeneration effort, it is thought to have had exclusionary tendencies (Brill et al. 2023; Ward et al. 2023). In both Stratford (East London) and Elephant and Castle (South London), these initiatives are noted to have displaced long-term council estate residents and communities (Flynn, 2022). In the Get Living development at Elephant and Castle, a one-bedroom flat commands a monthly rent of £1841, necessitating an annual household income of nearly £60,000 (getliving.com/terms-and-conditions). Here, the production of new housing sits at odds with long-term ownership opportunities for subsequent generations (Ryan-Collins et al., 2017); given their exclusivity, they can be interpreted as akin to retirement homes, albeit for transient, ‘liquid’ populations able to pay higher rates than can generally be charged on a longer-term basis (Horton, 2021).

Renting the place, not just your space?

BTR occupants might be unwilling or unable to make longer-term commitments, but they appear to be attracted to (inner) cities for employment and recreation opportunities. BTRs could hence be seen to cater to a need for location among a particular population at a particular moment in life. This is not new: Fielding’s (1992) observations in the London city region, later followed up by Gordon et al. (2015) across the UK’s second-order urban agglomerations, show that cities act as socio-economic escalators that many exit via out-migration in mid-life. Hence, BTR caters explicitly to this expectation of transience, implicating it in the clustering of young professionals in high-density, central-city locations (Moos et al., 2019; Smith et al., 2020). BTRs are therefore not marketed as a space to grow into but as a place to be, with promises of belonging to exciting new communities. But in contrast to student housing, BTRs are typically open to all and are sometimes marketed as ‘multifamily’ developments. Promoters of BTR argue they add social value (Brill and Durrant, 2021) by providing better-quality short-term accommodation than elsewhere in the PRS, with collective facilities which create ‘communities’ that bring together young singles and families (HomeViews, 2023). However, it may be difficult to create ‘mini communities’ by offering services ‘closer to hotels than homes’ (Bedford, 2019) that are designed to meet the needs of a potentially constant turnover of occupants.

Hyping marketing narratives

BTR marketing strategies ‘hype’ the format, presenting narratives of vibrant communities of ‘like-minded’ individuals. The landing page of BTR.io – which sells itself as a ‘community-edited database of Build-to-Rent and Co-Living Developments in the UK’– markets ‘Never Mov[ing] Again’, suggesting that BTR responds to the evolving needs of its occupants across the different life stages. Companies like Fizzy Living likewise pride themselves on delivering a ‘five-star service tailored to the fast-paced lifestyles of hardworking individuals’ (fizzyliving.com), but some reviews by residents point to a different outcome. On some review sites (e.g. HomeViews), current occupants report being offered Amazon vouchers for positive feedback – though many report never receiving the promised incentive – while on other sites (e.g. TrustPilot), reviews indicate that the ‘community vibe’ is illusory, with continual turnover in many developments and neighbours who are only rarely encountered. Reviews also indicate that some shared spaces are inadequate or inaccessible, resulting in individuals spending much of their time in their own apartments, and hidden fees emerging over time for services that were initially described as integral.

The fact that BTR might be charging a premium for a residential experience that is little better than PRS is particularly important given the government’s encouragement of BTR as one possible solution to the housing crisis in London. It is here that the conflict of BTR’s ‘social’ and ‘economic’ value becomes clear: in theory, BTRs create social value for occupants (by providing quality accommodation and amenities) whilst also creating a wealth-generating asset for developers. However, BTR’s immaturity means that the costs – and potential benefits – of BTR developments for renters are unclear, and the overall impacts on the affordability, quality and accessibility of this housing market are largely undocumented, motivating our analysis of the rents, amenities and locations of BTR developments in London.

Aims and data

This article asks: in what ways does the BTR market in London deviate from advertised hallmark qualities, and what implications might this have for housing choices as this market continues to grow? To gain a thorough understanding of the BTR market in London, we analysed primary data collected by Molior – a residential market data and research firm active for over 25 years – which showed that, as of the end of 2020, there were 373 large BTR developments in London, offering 40,041 residential units between them. The data, which is only for developments of more than 20 units, includes location, total BTR units and provider, as well as phasing details. It enables us to examine the distribution and nature of BTRs in London (Aim 1).

We supplemented this data with PRS statistics (ons.gov.uk) before examining a mix of marketing materials from a specialised, consumer-facing BTR property database (buildtorent.io) and customer reviews (homeviews.com and trustpilot.com) collected in December 2023, to explore whether BTR fills a gap in housing provision (Aim 2). These materials covered over 600 developments in the aggregate property database illuminating the amenities promoted as part of the premium residential experience. Over 60 verified tenant reviews across different schemes were then examined to gain a sense of overall sentiment (homeviews.com), with special attention paid to how these reviews are gathered via a wider repository of feedback from consumers (trustpilot.com). We chose these platforms because they authenticate user identities and validate that the reviews are from actual tenants. Reviews were cross-referenced whenever possible with other sources to confirm consistency and credibility in the reported experiences. For example, we checked multiple reviews by the same tenant and compared the details with other tenants’ feedback on the same property. Reviews with exaggerated language and inconsistencies that might indicate biases or fabrication were discarded.

Findings

As of mid-2023, nearly all BTR developments released to the market in London appeared fully let (Table 1, A7), suggesting sustained demand or, perhaps, an absence of attractive alternatives. Geographically, although the first BTRs appeared in Central London, it is in the East London subregion (Table 1) that they have grown fastest: there are 130 developments hosting, on average, 124 units and this accounts for 40% of all BTR units in the capital. The spatial trend suggests some correspondence with London’s ‘gentrification frontier’, which has rippled out from the Docklands to encompass the Olympic boroughs since 2012 (Reades et al., 2019). Elsewhere, BTR tends to cluster around well-connected centres such as Croydon (South), Wembley and Greenford-Sudbury (West), which could point towards the relevance of transit-orientated gentrification (Lagadic, 2019), especially the influence of the Elizabeth (Crossrail) line. The North (Barnet, Enfield, Haringey) accounts for just 6% of units.

Table 1.

Overview of Build-to-Rent (BTR) developments.

	Overview

1	Subregion	East	West	Central	South	North
2	Number of developments	130	93	64	52	34
3	Average unit count	124	122	71	106	76
4	Share of all units	40%	28%	11%	14%	6%
7	Released and fully let	69%	59%	58%	69%	65%
9	Office conversions	13%	46%	23%	60%	50%
B	Management
1	Build, own, let and manage	25%	20%	17%	15%	15%
2	Build and own only	42%	56%	62%	60%	56%
C	Facilities
1	No facilities	45%	58%	61%	77%	79%
3	Garden	42%	26%	23%	12%	12%
4	Concierge	35%	31%	31%	21%	9%
5	Lounge	15%	17%	13%	6%	3%
6	Gym^a	17%	14%	13%	4%	0%

Notes: The five subregions based on conventions of the London Plan (released by the London Mayor in 2015). ^aGyms considered here are those included automatically with the tenancy (i.e. a nearby gym, even under the block, is not counted unless managed by BTR operators).

Conversion versus new build

A key differentiator between BTRs is whether they were conceived as residential developments from the outset or were converted from office to residential use under the PDRs granted by The Town and Country Planning Order 2015. In principle, since office blocks have large and flexible floorplates, they lend themselves to subdivision into autonomous units with communal areas ideal for shared facilities. While the quality of heating and cooling systems, sound insulation and the degree of natural light are more variable, offices are often in or near amenity-rich high streets with ready access to public transport. Existing evidence suggests that tenants in conversions tend to be 18–40-year-olds, mainly in households with up to three people (RICS, 2018).

In London, 33% of BTRs (n = 123) were created under PDR (Table 1, A9), but there is sub-regional variation: they constitute the majority in the South (60%), where the borough of Croydon had the highest number of PDR applications of any English local authority (Ferm et al., 2020; RICS, 2018). BTR via conversion appeals to developers because it allows for swift development and delivery through simplifications to the planning and permitting process (RICS, 2018). It also allows for the reuse of existing buildings, which saves both ‘grey energy’– the embodied environmental cost of the existing building – and the effort of demolition and construction from scratch.

Until 2021, BTRs converted under permitted development were unconstrained by the national guidance on minimum standards for natural light or unit size (Ferm et al., 2020), with buildings originally designed as places of work not subject to the same nationally described space standard as residential properties (Walmsley, 2020). As such, many units in conversions appear to be single aspect, presenting significant thermal comfort concerns. Only since 2020 has it been a requirement to provide detailed floorplans of habitable units to local authorities, who can refuse conversions over concerns about substandard dwellings. Additionally, the change of building function without planning consent raises sustainability questions relating to local infrastructure (schools, GPs, etc.) and facilities such as communal space for exercise and recreation. Unsurprisingly, a Royal Institution of Chartered Surveyors (RICS)-commissioned study (2018) found that tenants chose conversions primarily for location and price – with finish and size a secondary consideration – and that they mainly intended to reside in these conversions for less than two years.

Unit types

A closer look at the 303 BTR blocks (81%) for which unit sizes were available shows an average of 1.55 bedrooms per self-contained unit, suggesting that most units are either one- or two-bedroom apartments. The North and South regions of London have a higher proportion of single-person studios (33% and 24% respectively), with the South having the strongest overall tendency towards smaller units (98% are two bedrooms or less). This is likely a function of the high proportion of conversions in Croydon (Table 1, A1). Central and East London, at 13%, offer the highest proportion of units with between three and five bedrooms; these are only ‘potentially’ family accommodating because there is no regulation to stop these units being rented to unrelated adults. On the whole, except in Central London, BTRs add smaller units to the market – in terms of the number of bedrooms – relative to the PRS as a whole (Figure 1).

Figure 1.

BTR unit distribution compared to the private rental market.

While the prevalence of smaller-sized units appears a suitable response to urgent demand for cheaper homes, there is ambiguity about whether the demand for smaller homes is the result of a genuine preference or is just a function of what people can afford in overheated housing markets. Here, it is notable that BTRs in central areas appear to have slightly more rooms on average than new homes in historically residential areas. These additional rooms provide the necessary space for multiple individuals or groups to share accommodation, thereby reducing the individual cost burden of housing. Shared living in this way becomes an attractive and cost-effective option for some, allowing residents to split rent and living expenses. This is a practical solution in areas where housing costs can be prohibitive, but there may be little difference between sharing in BTR and in the wider PRS.

Amenities

The marketing of BTRs centres on their provision of contemporary lifestyle benefits, including access to health and fitness facilities, social and common spaces, pet-friendly policies, co-working spaces, conference rooms, cinema rooms and garden roofs for gatherings and ‘big events’. This narrative activates imaginaries linked to what, for many, were formative social experiences. BTRs’ value proposition to renters is therefore that they encourage the making of ‘mini communities’ (Bedford, 2019) supported by economies of scale in services. The reality is rather more complicated.

Table 1C shows the most common types of BTR facilities, revealing enormous variation in amenity provision and that most (59%) do not directly offer any managed facilities at all. BTR-operated gyms appear uncommon, for instance, but provision varies significantly between subregions (Table 1, C6): BTR units in North and South London have the fewest facilities and most closely resemble traditional PRS units, while the East has the highest number – and greatest diversity – of amenities. We hypothesise that amenities are most frequently offered when these are not readily accessible in the area, as would be the case in much of East London during the early 2010s. Our data also suggests that more facilities are included as project size increases, but this claim is not straightforward because BTRs vary greatly in scale, with the largest boasting hundreds of units. We observe that more recent BTRs are moving away from integrating facilities, perhaps because amenities have become financially unviable with the rising cost of land. A better understanding of why tenants would choose BTR over traditional PRS units is hence needed if these blocks are otherwise functionally indistinguishable.

Premium rents

BTR unit prices naturally vary within a given sub-region, but they often also vary within the same development: depending on floor area, storey or features, the same unit type can be offered in different price bands. However, the sheer scale of large BTR developments can influence estimates of small-area prices, so a weighted average median was used to estimate BTR rent by unit type. The baseline for comparison is the Office for National Statistics’ regionally averaged median rent for 2018–2019.

Overall, the BTR tenure carries a premium, but its magnitude differs by unit type (Figure 2). The largest premiums are for two- and three-bedroom apartments, notably in the East, West and South. Larger units could command higher prices than one-bed flats or studios because they are still cheaper on a shared, per-person basis as smaller flats tend to cost more per square metre. However, shared BTRs cannot be directly compared to HMOs for two reasons: first, HMOs are defined as having at least three unrelated people who are not a household and, as shown in Figure 2, BTR units typically have fewer than three bedrooms; and second, the residents of an HMO each have a separate contract with the landlord whereas sharers of a BTR unit would hold a single contract. Of course, the unofficial ‘secondary’ rental market is widespread in cities like London, but the growth of the BTR market – and tighter policing of the ‘T&Cs’ that portfolio management implies – presents new challenges for sharers trying to gain a toehold in the capital.

Figure 2.

BTR rental prices juxtaposed with equivalent privately rented units.

Studios and one-bedroom BTR units are slightly cheaper in the South of the city (Figure 1), likely reflecting Croydon council’s policy on social housing which may include discounted BTR units (London Councils et al., 2017) as part of council provision. ‘Micro-apartments’ in (primarily) converted offices in Croydon have been criticised for overcrowding and other quality-of-life issues (Clifford et al. 2018; RICS, 2018), but it is worth recognising that quality of life can mean different things to different people, and even to the same people at different life stages. A planning consultant for Croydon and Camden interviewed for the RICS (2018: 46) report argues that pushing for larger space standards – and indeed types of units – might be seen as an attempt to project ‘lifestyles on what other people want’. This is a contentious view as it seems unlikely that young people prefer smaller spaces except to the extent that space needs to be sacrificed to fulfil other priorities – like location – when on a limited budget.

BTR office conversions may then simply be the ‘least bad’ option for young people with few alternatives (Laxton, 2022); however, we cannot discount the possibility that young professionals may perceive greater returns from investing time in careers and networking than in long-term residence. Corners might be cut on domestic comfort, housekeeping and property maintenance, for the prospect of greater returns later in life; these kinds of living arrangements can hedge against missed opportunities in knowledge exchange and professional network development which are understood to be more limited away from the urban core.

Contention surrounds the suitability of BTR properties for areas where families with children compete with multi-income professional households for limited housing supply. In Croydon, it has been observed that, despite converted units not being intended for families, ‘demand meant families would end up there’ (RICS, 2018). While these properties offer short-term relief to some, they fail to adequately address both enduring local issues of insufficient affordable housing and insufficient ‘family-sized’ housing in the capital.

The relative cost of living space therefore plays a pivotal role in understanding how studios and one- or two-bedroom apartments within BTR developments can discourage families from residing in urban areas. As ‘push’ factors like the rising cost of living further contribute to the displacement of individuals and families to more affordable areas, BTR exacerbates this trend, at scale. By primarily offering smaller, premium units, it potentially excludes families, further amplifying the effects of socioeconomic constraints on housing choices. Inner London in particular has seen declining numbers of primary school students – and the resulting closure of primary schools – reflecting the cumulative impact of these trends on families’ ability to access suitable housing options (Lewis et al., 2023).

Accessibility

In London, BTRs are predominantly located close to rail stations and are often part of a larger cluster of such units (Table 1, A1). All four large clusters of BTR schemes – Stratford in the East, Croydon in the South and Greenford-Sudbury and Wembley in the West – are associated with rail interchanges. Smaller groups of BTRs are scattered along the Piccadilly line to Hounslow Central and on the Overground network in Central and East London. The connection to rail transit leading into the commercial centre of London broadly reflects the intended demographic: working professionals aged 18–40 for whom accessibility to employment and other opportunities ‘in town’ commands a premium. Even for the cluster in Croydon, the RICS report suggests that the supply of BTRs was ‘where it was wanted’ (RICS, 2018).

BTRs in North London – where there is a high density of commuter stations offering access to Central London in under 45 minutes, especially in the North West – are particularly interesting in this regard: the arc of developments from Hounslow Central to Harrow-on-the-Hill has the starkest unit-size difference from the surrounding rental market (Table 1, A1) and is also the least likely to offer on-site amenities (Table 1, C1). Interestingly, it also has a lower price premium than the average property in the local PRS (Figure 2). Unlike developments in Central and East London, which provide BTR in the context of a relatively saturated housing market, northern BTRs may represent a testbed for the expansion of the BTR format.

Discussion

BTR offers an alternative to existing models of private renting, and on the surface appears to solve several of the problems facing renters in an overheated housing market. The overall number of units and, by implication, bed spaces in BTR in London is not insignificant, suggesting a major contribution to the provision of new homes for Londoners. However, we have found that BTRs are up to 60% more expensive than comparable units in the private rental sector, so the flexibility they offer comes at a cost, exacerbating urban gentrification. Further, the developments examined in our analysis add proportionally more studio and one-bed dwellings to the housing stock and place a much higher premium on larger, potentially family-friendly units (Figure 2). If these developments become mono-cultural – like purpose-built student accommodation or care homes, but for precarious professionals – BTRs will cut against the ‘mixed-community’ and tenure ethos that has underpinned many urban regeneration initiatives since the 1990s (Camina and Wood, 2009). The spillover effect of age-based concentration could create ‘generationed’ geographies of high-density living (Moos et al., 2019), especially among Millennials and Generation Z.

Given the preponderance of single-occupancy, one-bedroom properties, and the type of rent demanded for these relative to other properties in the PRS, the rise of BTR does not seem to address wider demands for affordable housing in the capital. On the contrary, the concentration of young professionals in BTR units seems likely to attract the kinds of local amenities that will embed processes of gentrification and social uplift. Indeed, the pattern of BTR development suggests that these schemes are prominent in neighbourhoods undergoing gentrification, triggering ripples of residential instability and displacement (Elliott-Cooper et al., 2020). Moreover, the consumption of housing on a ‘just-in-time’ basis appears to privilege quick decisions at the expense of longer-term community formation, and if BTRs continue to be small and expensive – as already shown by our analysis – then pockets of the city could become de facto campuses for the working. BTR hubs are thus catalysts of change for their surroundings in unpredictable and, we suspect, currently unhelpful ways.

Against this, it appears that BTR remains lucrative for developers, who can charge a premium for units, albeit with the promise of additional bespoke services. Yet we find little evidence that these amenities necessarily add investor value to BTRs. In fact, we see a tendency away from shared amenities, with only 41% of BTRs directly offering them. From the perspective of investors – for whom BTR is an asset – providing amenities ‘in house’ does not appear necessary to ensure ‘heads on beds’ and, in practice, many operators now simply let space in developments to gym chains instead. Future research should explore residents’ utilisation of these shared facilities, particularly considering their proximity to existing amenities and public transport.

Overall, then, it seems to be the location of BTR that ‘adds value’ for both investors and renters: our mapping suggests that the business model thrives on the ‘rent gaps’ associated with new transport infrastructure investment (Lagadic, 2019) and rising land values in South and North London especially. Table 1 shows BTRs clustered around transport hubs, offering ‘location as a service’ to the type of in-movers who tend to come with more cultural and educational capital than financial capital (Kamruzzaman et al., 2014). As such, this implicates BTR development in a process similar to, but distinct from, other forms of gentrification: new units are largely unaffordable to existing local residents, but the incomers are themselves in a precarious housing situation and vulnerable to shifts in fortune and finance in a way that homeowners and those in socially rented units are not.

As noted earlier, larger developments in East London are most likely to have additional facilities for tenants (Table 1, C1), which may reflect the rapid growth of the residential market in this area as catalysed by the planning powers of the London Legacy Development Corporation created to oversee the redevelopment of Stratford and the Olympic boroughs after the 2012 Games. But these changes may also reflect a wider shift away from family- and car-orientated neighbourhoods to mixed-use, inner-city blocks at a larger scale. Meanwhile, South and North London have the highest proportion of BTRs converted from offices that seem to offer fewer bespoke facilities. These findings align with previous work on permitted development which suggests that housing quality suffers from local pressures to meet housing targets (Clifford et al., 2018; Ferm et al., 2020).

Whether BTRs will help to ameliorate or exacerbate the UK’s long-running housing crisis remains an open question. Our analysis suggests that this asset class is far from a single solution but, given London’s fixation on a ‘growth model’ which encourages development, it might be the only way that the market can provide new housing that satisfies the needs of both investors and young incomers. This conclusion is relevant not just to London but also to second-order ‘core cities’ such as Birmingham, Leeds and Manchester where BTR is becoming a major provider of housing (Lane, 2020). Despite their differing dynamics, core cities’ housing markets face similar challenges: gentrification, through BTR, is being encouraged by planning deregulation and inward investment along with rising housing demand from post-students and young professionals (Goulding et al., 2023).

Conclusions

BTR represents a new and fast-growing model of housing provision in the UK; it is most prominent in London, where there appears to be demand for well-managed rental properties as well as the financial incentive for investors to capitalise on this demand, especially on the gentrification ‘frontier’. To date, discussion of this tenure model has not been informed by extensive data about BTR units; this article has drawn on data relating to 373 BTR developments in London – representing over 40,000 housing units – to demonstrate that developments are particularly common where transport-related infrastructure investments have opened up ‘rent gaps’ that give developers opportunities to extract maximum value from development. Examining how these developments are marketed, the article has also shown that this accommodation is sold as offering a de facto ‘subscription service’ that promises convenience, service and location rather than size or housing adaptability.

Questioning whether BTRs add affordable ‘local’ homes to London’s housing stock, this article has shown that these do add units and beds but that they are, on average, both smaller-type homes and rented at a premium. Hence, BTRs are not suited to less affluent households (especially to families) and may provide only short-term relief in local rental markets by catering for more affluent single- or dual-income households. Their design and distribution merit further attention since they appear narrowly targeted in demographic terms and are in most instances unlikely to meet the needs of families (with no BTR schemes having any four-bed properties, for example). At scale, housing like this may also exacerbate the demographic shifts leading to the closure of dozens of primary schools across the capital (Butler et al., 2013). Consequently, an important avenue for longitudinal analysis is tracking BTRs’ role in population redistribution and household formation over time. Future work could also compare the floor space of existing and BTR rental units controlling for the number of rooms (something that could be possible with linked analysis of Energy Performance Certificates which are mandatory for rental properties). We expect that where BTRs are mainly new-builds – such as in East London – these may be more spacious (i.e. meaning that the cost per square metre is not necessarily greater than in other parts of London).

Analysis of the cost of property by floor space suggests a way of understanding affordability, but this means little without adjustments for household structure, income and how these change over time. In particular, attention should be given to how indirect income through intergenerational transfers can significantly skew measures of relative affordability. Drawing on the ‘bank of mum and dad’ through the use of family property as collateral is one example, but in a tight housing market, co-residence – when children stay with their family for little to no rent – is another important form of transfer (Worth, 2021). Transfers can further exist as gifts, information or maintenance/support, creating significant divides between individuals with, and without, family support.

Overall, we conclude that BTR provides ‘quick-fix’ rental accommodation that makes only a marginal contribution to solving London’s housing crisis. Here, we have added to the literature on BTRs, which has been predominantly focused – thus far – on the institutions that lead the sector (see Brill and Özogul 2021; Christophers, 2022) and on the deregulation and policy shifts that have encouraged investment in this asset class (Brill and Durrant, 2021). This literature is important to understand how BTRs are being produced via assemblages of state and corporate power and we have complemented this with attention to location, cost and amenity, paving the way for more nuanced explorations of its consumption and occupation. Longitudinal work on tenant experiences of BTR, and how it fits into wider housing trajectories, is then a way forward, but for now, our conclusion is that BTR must be carefully scrutinised in terms of its impact on local residential mix and housing affordability.

Footnotes

Declaration of conflicting interests

The author(s) declared no potential conflicts of interest with respect to the research,authorship,and/or publication of this article.

Funding

The author(s) disclosed receipt of the following financial support for the research,authorship,and/or publication of this article: This project was made possible through funding by an EPSRC grant (ref: 1827316) and the support of our data partners,including the Office for National Statistics and Molior London Ltd. The authors are alone responsible for interpreting the data.

ORCID iDs

Boyana Buyuklieva

Ivana Bevilacqua

Adam Dennett

Jonathan Reades

Phil Hubbard

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