In conjunction with rising prices in the private rental sector, the growing demand for affordable housing has caused some housing developers within the UK to replace build-to-sell (BTS) with build-to-rent (BTR) developments. BTR schemes may aim to meet the demands of those who are unable to afford to buy properties in the UK’s major conurbations but there must be economic viability for developers for BTR to increase.
Developments that are set up as BTR can be structured efficiently for VAT purposes from the start. It is much more difficult to do this when market conditions lead a developer to switch from BTS to BTR during the build process. This is a concern for developers as a 2017 report by the British Property Foundation and Barclays stated that only around 20% of BTR schemes are purpose built, with the remainder mostly being designed initially for BTS.