Traditionally speaking, one and two-bedroom apartments make up the crux of rental properties in the UK. This is especially true in cities, where young professionals’ on-the-go lifestyle lends itself to plush apartments – preferably with river or skyline views.
These types of homes have always been ripe for investment, but they’re not the only game in town. Single-family homes are currently a small niche, but they’re growing to become a popular investment and sought-after rental home.
With the number of people renting on the rise, we’re seeing more families – a demographic typically associated with buying – opt to rent their homes. Which poses the question: are single-family homes the next wave of property investments?
What is a single-family home?
A single-family home is a property built for the rental market to service families. It’s another form of build to rent. However, unlike most BTR units, which appeal to single professionals, it’s focused on young families aged between 30 and 45.
Single-family homes are naturally larger than other build-to-rent units and are commonly found on the outskirts of cities. They’re designed specifically for renting and are already hugely popular in the United States. Now they’re picking up steam in the UK, and investors and developers are taking note.
Where can I find a single-family home?
Currently, single-family homes are largely concentrated in the north of England. Yet, their expansion is rapid, and you can expect to see an increasing number of houses crop up around the UK as the trend grows.
Build-to-rent property developer Packaged Living has committed to building 5,000 single-family home properties already over the next five years. Milton Keynes, Manchester and Newcastle are three of the areas targeted for investment.
Expect more developers to pay attention to this housing trend, which will see an increase in the overall number of single-family homes within the next few years – especially in the aftermath of Covid, where the desire to leave bigger cities has fueled people’s appetites for suburban living.
Why single-family homes?
The last decade or so has seen a lifestyle change, with the average age of people getting married and settling down now around 34 years’ old. But these numbers are mostly biased towards larger cities, where professional life is normally promoted over a personal one.
On the outskirts of cities and in rural areas, the mindset is somewhat different. There are currently 2.3 million rented households in suburban areas, revealing demand for single-family homes. Most of these are occupied by younger families.
By the end of this year, a quarter of the UK housing market is expected to accommodate the private rented sector. Those homes will come in many shapes and sizes, including single-family properties for aspiring families.
Are single-family homes a good investment?
Single-family homes have several benefits when compared to other types of rental properties. Their locations tend to sit on city outskirts with good commuter links, which means they’re likely to experience faster appreciation thanks to good travel connections.
Take Milton Keynes, for example. Over the last 10 years, house prices have increased by 57 per cent as the Buckinghamshire town evolved into a more affordable alternative to London. While many established areas have reached their peak, up-and-coming suburban towns still have plenty of room for yield growth and capital appreciation.
Families who rent are likely to stay in a property for longer, too, meaning void periods could become a rarity in single-family units. These families are at a stage in life where stability is important, which means long-term living solutions rather than the shorter tenancies and moving from place to place.
The future of investment?
Traditional rental properties and big-city apartments will always maintain their appeal, but the single-family home offers a genuine alternative. If anything, it’s a chance to add variety to portfolios, especially if you’ve mostly focused on traditional build-to-rent developments.
Single-family units will only become more sought after as people decide against owning their own home, instead looking for long-term solutions in the rental market. And as build to rent grows in importance and facilitates modern living needs, the single-family home option adds another dynamic to an already popular method of renting.