Institutional investors can unlock potential of single family housing – React news

The death of housing supply in the UK has been widely documented, leaving the nation grappling with an unrelenting
housing crisis.

The unfortunate state of affairs is well known: a sustained surge in house prices has propelled the cost of the average
home to a staggering nine times the average annual earnings, a stark contrast to the 3.5 ratio observed in 1997. The availability of homes for purchase, as opposed to renting, remains alarmingly below demand, and a whopping 15% of constructed dwellings fail to meet the government’s decency standards.
In short, British housing is epitomised by exorbitant costs, scarcity and often inadequate quality.
Single family housing (SFH) offers a different product to urban build-to-rent, typically taking the form of a house as opposed to a flat and largely being located in suburban areas. The untapped SFH market offers an opportunity for developers to provide a solution with suburban developments in less built-up
areas. These properties tend to offer a better quality of life for new families in comparison to those in busy, polluted cities. SFH, with its huge growth potential, can play a key role in helping to meet housing needs and reduce the significant supply shortages in the rental market. Furthermore, it also provides a degree of diversification for both international and domestic multifamily investors, which can capture a more varied tenant base and diversify their
portfolio in terms of locations and property type. Gaining traction

“With the supporting infrastructure architecture,
SFH can use technologies to create smart homes”

Since its conception in the UK, SFH has seen rapid growth and development: Savills highlighted in late 2022 that there were 15,000 units of SFH in planning – more than double from the previous year – with a total of 31 schemes being operational. With millennials and Gen Z now entering their stage of adulthood and where the idea of starting a family is now becoming a reality, residential areas must align with their demands to support working from home, e-learning, digital communication, and the shift in focus for minimised environmental impact.
The SFH proposition specifically aims to create safe neighbourhoods in locations with in-demand factors
associated with starting new families, such as proximity to employment, desirable schools, and transport infrastructure to provide easy access to these areas.

These new family fundamentals are intricately analysed by developers. Build-to-rent investors in the UK have traditionally focused on purpose-built flats in city centres, but now institutions are turning to the suburbs, seeking to unlock a far larger market of rental houses. The UK has attracted £2.8bn in SFR investment, making it the largest market in Europe, with the largest platforms planning to build portfolios of more than £12bn between them.
The sector has grown to 9,400 operational homes in the UK, with a further 11,900 in the pipeline. Current investor ambitions would involve a rise to 50,000 by 2025. If the UK grew to the same institutional market share as the US, it could mean 95,000. Based on the forecast rate of delivery, this should take five years. Still, this would be significantly short of the total potential in the UK.

Single family housing can reduce the significant supply shortages in the rental market
The Future Homes and Buildings Standard regulations have been set out to ensure new homes produce 75% to 80% less in carbon emissions. With the supporting infrastructure architecture, SFH can use technologies to create smart homes. IoT technology monitors and reports on each building’s efficiency, using energy management tools, water meters, environmental conditioning monitors and more to detect and report where waste is.

It also shows how to improve usage, streamlining building efficiency for building operators, developers and residents while adhering to governing body regulations for greener buildings and rigorous new energy standards.
Ease of moving in SFH provides ease of moving in, the technological support, reduced operational costs and transparent environmental impact. It requires scalable infrastructure to grow as bandwidth demands increase and the services need to be provided directly into the properties to offer symmetrical speeds for upload and download, granting faster and more seamless access to the cloud.

This empowers technological capability while future-proofing any development from now to 60 years into the future. The impetus now lies squarely in the hands of private and institutional investors, whose forward-looking and long-term perspective will determine the true unlocking of SFH’s potential. As this flourishing industry gains momentum, we actively collaborate with investors to align the