The comment was made during an interview with DFT, where Guy discussed how developers should consider converting their residential projects into buy-to-rent if they are seeing slower sales rates, rather than allow their schemes to be left unsold.

“[Developers] need to look at alternative options or slice and dice a scheme into rentals to have those units income producing, rather than sitting there with a higher cost of capital,” he stated, in the instance where units don’t sell.

Guy’s advice comes as interest rates remain high, following the Bank of England maintaining rates  at 5.25% and slow UK house price growth.

Despite the climbing interest rates of the past two years, the switch from build-to-sell to build-to-rent extends further back.

“I think it has come to prominence over the past few years,” said Guy, particularly during the height of the pandemic.

However, the current climate has now shifted this route from being a simple option to, in some cases, essential.

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“We're seeing more people look at it out of necessity as a way to try and offset these slow rates of sales.”

However, Guy warned that there could be some issues around this: “The rise in interest rates has created servicing to be tighter than it was before the increase in debt yields.

“This is being offset by the fact that we're in an inflationary environment at the moment and rents are still going up.”

“The second problem they come across is losing the new-build premium,” Guy added.

He claimed that the solution to this was for developers to commit to rentals long term until the sales market improves, rather than just “flipping” to them short-term while losing out on the premium.

Since the Covid-19 pandemic, Guy has witnessed developers adapting to the high interest rates and changing nature of house prices with some successful rental stories.

He claimed that some units — particularly in central London and in co-living schemes — were being rented out in as quick as three months, rather than the projected nine months to one year to fill.

“There’s a real positive story here for rentals,” commented Guy, adding that there was potential for developers and investors to experience “a lot of upside” as a result of high interest rates in the short term.