THE “BUILD-TO-RENT” MODEL: A NEW TOOL IN SOLVING THE HOUSING CRISIS

Abstract

The present study sets out to explore the housing affordability crisis in the United States. The crisis has been caused by a number of factors, including the decline in wages and average income, the increase in rental costs, and the problem of "distorted" demand due to the displacement of middle- and low-income households by high-income households. The study recommends the search for new tools to solve the crisis. The article examines the Build-to-Rent (BTR) model, which gained popularity in response to the housing crisis and the increase in the cost of purchasing new homes in the United States after the 2008 financial crisis. The "Build-to-Rent" model has emerged as a response to the prevailing challenges in the housing market and the increasing focus on the private rental sector. The utilisation of the model confers a number of advantages for tenants, developers and investors, thereby resolving the issue of housing affordability for affluent tenants and families seeking quality affordable rental housing. The expansion of the BTR subsector in the United States during 2019-2024, as evidenced by the surge in the number of suitable house types, underscores the pivotal role of the model in addressing the nation's housing crisis. The primary benefits for tenants include the reduced cost of rent in comparison to mortgage payments, which are increasing due to rising mortgage rates. Moreover, rental houses offer a number of additional advantages. These include well-developed infrastructure and a strategic location in areas where housing costs are highest. This, in turn, ensures a greater degree of security of residence. Institutional investors are presented with the opportunity to acquire guaranteed, stable income from rent. Concurrently, the primary disadvantages and risks associated with the implementation of the novel instrument pertain to the financial, regulatory and social constraints that emerge as a consequence of the relatively recent practice of employing the BTR model.