It emerged last month that UK rents rose at a record rate of 9.2pc in March, taking the average monthly rent across Britain to £1,200 – fuelling the country’s housing crisis.
Mr Hughes said the UK needs to construct between 30,000 and 50,000 build-to-rent homes a year to cater for growing demand, which in turn will boost productivity.
He said: “The UK needs flexible accommodation for people to come and go which allows them to move around freely and helps them to act productively with employers.”
James Stevens, head of real estate investment at Aviva Investors, added: “The standard of living generally in residential accommodation in the UK historically has been horrendously low.”
A growing push from pension funds into the rental sector comes as they shift away from traditional real estate investments, such as shopping centres, which haemorrhaged income during the pandemic.
Mr Stevens said Aviva Investors has ramped up the proportion of its real estate investments that are in residential property from 2pc to 8pc in the last four years and will likely increase this to 30pc in the next decade, with a big focus on build-to-rent.
Across the UK, he said, there will be “exponential growth” in institutional investments in building homes to rent over the next five years, particularly in properties for families.
High interest rates and construction costs meant total investment in the build-to-rent sector dipped from a peak of around £6bn in 2021 to £5bn last year.
However, investment in family-focused rental properties has increased nearly 10-fold in the last four years to more than £2bn.
Chris Norris, Policy Director for the National Residential Landlords Association, said the majority of private renters are satisfied with their accommodation and the services their landlords provide.
He said: “At a time when demand is far outstripping supply, we need more homes of all types. Whilst some of the demand for new rental properties will be met through build-to-rent schemes, it is not a panacea and should co-exist alongside buy-to-let.”
