Following a bumpy year for the build-to-rent (BTR) sector, many will wonder what 2024 has in store. Guy Nixon, founder and chief executive of Native Group, which has more than 5,000 units across 18 schemes in the UK, discusses potential trends and challenges for the year ahead.

How will the market change from 2023?

BTR rents had a spectacular year. The pressure on the mortgage market from higher interest rates closed that market off for lots of would-be buyers, who have had to stay or move into BTR. There is a major housing shortage in the UK, which has been driving that as well.

But it cannot go up forever – there has to be a point at which it just becomes too much for people. I think we will continue to see growth, but not at the same level. We have seen over 10% growth in some markets in the UK in 2023, and that is not sustainable.


What will be the key challenges of 2024?

It is still an undersupplied market and interest rates are still high, which is going to slow things down. I think the slowdown will continue for another six to nine months, but I can definitely see improvement coming in terms of the pace of development into the sector.

Interest rates have made it much harder to work out whether schemes are viable because they have been moving around so much. There has been so much uncertainty around when they might come down and, when they do, by how much. That will impact supply coming into the market.


What trends do you foresee for this year?

Dynamic pricing. We understand revenue management because we come from the hotel industry. Revenue management in hotels is about charging the best possible price at an average daily rate on a particular day.

Revenue management in BTR is really all about the length of the lease and when that lease is likely to expire. If somebody is moving into an apartment in November, but you don’t particularly want an expiry the following November, you might offer them a slight discount on the rent if they take an 18-month rather than 12-month lease. At as little as 5%, it is worth doing.

We are doing it already and I am sure we are not alone as there is revenue management technology in the BTR sector. It is not something that you could do without the technology.

In the hotel market, where dynamic pricing is much more material, you would never launch a hotel without a revenue management system. If you did, you would be writing off 10% of your revenue. I think in BTR it will be the same within five years.


Which areas will be key for BTR this year?

The Birmingham market is still undersupplied, but there is a good flow of supply coming in now. I think Liverpool is a tough market for BTR, and there are a lot of markets where it is massively undersupplied – Bristol, Bath and London. Some less obvious regional markets like Milton Keynes have been incredibly strong.

Rent control measures in Scotland removed a lot of interest that might otherwise have been there, but there was still investment going into that market. There are some really interesting assets coming into Edinburgh and Glasgow, which are very undersupplied markets.


How will the industry tackle sustainability this year?

There is never a case with an institutional investor where they don’t want to drill into your ESG [environmental, social and governance] position. ‘What are you doing? How are you measuring it? What are you doing to reduce energy use?’ We as a business, I hope, will be in a good place at the end of this year. Meeting [2030] targets for us will not be an issue. We are on track to be a B-Corp by Q4 2024.

The assets are much more complicated. Newer assets, almost without exception, have renewable energy supplies. However, there are new technologies coming through now that would be very expensive to retrofit into an asset; whereas new assets now have that infrastructure built in. So, it is going to be a lot easier for what is coming out of the ground now [to be sustainable] than it was for what came out five to 10 years ago.