The BTR Pipeline Continues to Grow in Scotland
– but Viability should not be taken for granted.
Scarlett Land and Development (SLD) are tracking 3,727 units in Edinburgh (excluding Mid-Market Rent) and c. 4,000 units in Glasgow; as these figures include “pre-planning” units they will be subject to variation.
Our interactive Map of BTR in Scotland is here:
However, our experience informs us that it’s not all plain sailing. BTR viability is increasingly difficult achieve due to escalating build costs and limitations on rental values – especially outside Edinburgh. Build costs need to be controlled through modern methods of construction (MMC), or accommodated through land value and/or rising rental values – not easily achieved.
BTR planning policy must assist viability if investors are to continue to invest in Scotland rather than England. SLD are working closely with the Scottish Property Federation (SPF), developers and investors to help inform Councils, planners policy makers. Glasgow has some viability advantage as there is no requirement for Affordable Housing. Edinburgh has moved positively to moderate the impact of Affordable Housing on viability through its “Support for Build To Rent” paper published by the Housing, Homelessness and Fair Work Committee (20 January 2020) which sets out a fresh approach to the delivery of affordable housing in BTR developments. Contact Scarlett Land and Development for details.
As build costs continue to rise the sector needs to work together to further evolve policy and promote initiatives that trigger viability – such as delaying the payment of Council Tax until first occupation in BTR schemes.
SLD are acting for L&G in the purchase from S1 Developments of 338 BTR units at Skyliner (Leith, Edinburgh). SLD also acted for Platform_ in their acquisition of c.5 acre sites in Bonnington, Edinburgh for BTR. We are actively engaged as BTR consultants on a number of other nascent schemes across Scotland and fully support the work of the Scottish Property Federation as a key voice of the BTR sector.
BTR has huge potential to deliver rented accommodation that is high quality, energy efficient, affordable and purpose built – but viability should not be taken for granted.
Based on an abridged article published February 2020 in Citylets Rental Report Q4 2019