Growing Role of SFR in West Midlands PRS Market Revealed by Latest Research From Ascend, ARL & PriceHubble Strong SFR rental growth underlines the sector’s popularity and need for further supplyAverage SFR household income 26% higher than wider PRS marketFirst report of its kind to compare live rental, operational and resident demographic SFR data with the wider PRS market The popularity of the West Midlands single-family rental (SFR) market has been revealed by new research from Ascend, in partnership with the Association for Rental Living (ARL) and PriceHubble, in its latest ‘Snapshot’ report. The report benchmarks SFR against the wider private rented sector (PRS) for the first time, enabling detailed comparisons on a location-by-location basis. The SFR findings are drawn from blended data across all stabilised schemes managed by Ascend, the UK’s largest third-party operator of SFR, alongside PRS data from PriceHubble through its Dataloft Rental Market Analytics platform, the UK’s most rigorous source of achieved rents and renter demographics covering the entire PRS, aggregated from multiple tenant referencing companies. The research highlights the strong and growing demand for SFR in the West Midlands. As of the end of June 2024, SFR occupancy stood at 99.4% and average rents had increased to £965, at a lower average affordability ratio than the PRS as a whole. A comparison with the wider West Midlands PRS market, using data provided by PriceHubble, suggests the SFR sector is continuing to rise in popularity. While the wider PRS market holds a slight rental premium - £1000 per month on average vs £965 for SFR – it includes higher-cost city centre rentals compared to the generally suburban locations of SFR homes. The gap is narrowing too: SFR rents are converging with those seen in the wider PRS, driven by increasing resident demand. The popularity also points to a key area of housing provision: 60% of SFR homes in the West Midlands are three-bedroom houses, compared to 22% in the PRS as a whole, highlighting the important role SFR is playing in meeting the growing demand for this segment. But even as SFR rents come closer to the wider PRS, the sector’s affordability ratio remains lower. Average household income for SFR residents is £64,000, more than 26% higher than the £50,454 average across the wider PRS. This means that rent on SFR homes represents 26.7% of household income on average (PRS: 30.1%), well below Homes England’s 35% guidance for household affordability. Of the three areas reviewed by Ascend’s Snapshot series so far – Greater Manchester and Cheshire were featured in the first and second reports – SFR tenancies are longest in the West Midlands. The average tenancy length is three years, but even this understates the true picture, given that four out of five SFR homes in the county were built within the past five years. 52% of SFR residents have lived in their current home for three years or more, and a quarter for over four years; an impressive 83% of households remain in their home past the initial tenancy period. Ascend is the UK’s largest third-party operator of SFR and manages two thirds of the entire asset class, thereby holding the largest set of live operational data for the sector. Its Snapshot series of reports provides the sector’s definitive research on performance and resident profiles across the main regional markets. Other findings revealed by the Snapshot on West Midlands SFR include: Average rent collection rate of 99%Average resident age of 34 (wider PRS: 33)49% of households include children (wider PRS: 24%)Average distance moved to a SFR home: 33 miles (wider PRS: 18.6 miles), illustrating the popularity of SFR among those undertaking more major relocations Paul Borrmann, Managing Director of Ascend, said: The West Midlands is one of the SFR sector’s most mature markets, and as such this Snapshot provides a fascinating insight into the strength of the asset class. Occupancy at 99.4% and rents rising but remaining at a more affordable level than PRS as a whole, points to a sector that is both hugely popular and has considerable room for further growth. Wherever you look – be it average household income, age profile or length of tenancy – you see a sector that is in very robust health. What’s more, it is appealing to a wide range of residents: the fact that half of SFR households don’t include children, with an average occupier age of 34, suggests it is being embraced not only by families but young professionals too, seeking the additional space that is currently being under-provided by the wider PRS. This shows how SFR is very much a positive choice for residents, attracted by the superior product, better service and greater security of tenure that is on offer. Brendan Geraghty, CEO of the ARL, added: This snapshot report again highlights the growing importance and popularity of single-family build to rent, as it offers quality, professionally managed homes that meet local needs. The high occupancy rates demonstrate the strength of demand, although the rising rental rates show that demand is still out-stripping supply – we need to build many more rental houses to continue to match the need. Sandra Jones, Managing Director at PriceHubble, commented: SFR represents a tiny fraction of the wider PRS today – less than 1% - but it looks poised for growth because of its key role in delivering on the government’s ambitious housing targets. Bringing forward high-quality, well-managed rental houses that offer secure tenure, addresses a gap in the current market which will help to rebuild trust in the housing sector. Accurate data is critical to delivering the right stock in the right places. The findings within this report highlight a strong demand for SFR homes in the West Midlands and urgent need to bring forward more supply. This report is the latest in a series of snapshots being produced by Ascend to analyse the SFR market in a range of locations across the UK. With the SFR data drawing exclusively on Ascend’s own data – the largest set of live operational data for this asset class in the UK - the suite of research will provide a comprehensive insight into the SFR sector and its residents. Ascend is the leading third-party operator of institutionally-owned SFR, with over 7,000 homes under its management, equating to around two thirds of the entire UK asset class. PriceHubble is an international technology company developing property data solutions for real estate and finance across 11 countries. PriceHubble provided the PRS data for this reporting suite. Its UK business incorporates Dataloft Rental Market Analytics, the UK’s most rigorous source of achieved rents and renter demographics which covers the entire private rental sector, using data aggregated from multiple tenant referencing companies. View the full Snapshot report here. Back to news Posted: 17 September 2024