Tenants in the UK will soon have a greater choice of newly-built homes to rent as round two of a nationwide building scheme gets underway.

Housing Minister Kris Hopkins has published a shortlist of developments in areas including London, Manchester, Liverpool and Kirklees, which could all benefit from a share of the £1 billion Build to Rent Fund.

Up to 6,500 homes will be built using this latest phase of funding - meaning the government is on course to start work by 2015 to deliver 9,955 newly built residential properties for rent.

The Build to Rent Fund was launched to stimulate new private rented housing supply and to provide opportunities for new institutional investment in the sector.

Such demand had been predicted by Strutt & Parker and detailed in the recent Housing Futures report, which states: "Rental housing in the UK today is mainly delivered through three avenues: social housing; private individuals renting buy-to-let properties; and large-scale private property companies and estates.

"The Private Rented Sector (PRS) demand grew from 9% of housing stock in 2001 to 16.5% in 2011, and is projected to increase to 37% by 2025.

"With affordability stretched in many places, the need for private rental has surged, and we anticipate the trend continuing - as, according to the 2011 English Housing Survey, the growth pre-dates the current market cycle. It has been underpinned by declining ownership, delayed family formation, growing student debt and the growth of one and two-person households."

Round one of Build to Rent was significantly oversubscribed with £1.4 billion worth of bids received. Approximately £300 million has been allocated under this stage, with £700 million set to be allocated under round two.

A total of 18 projects are either in the final stage of due diligence or contracting stage following round one, half of which are in London. Also included in this category are projects in Durham, Liverpool and Birmingham.

Construction has also already started on two Build to Rent developments in Southampton and Manchester.

The 36 projects on the shortlist from round two will also now go through the same due diligence process, with successful bids receiving a portion of the funding to deliver new homes for renters across the country.

Housing Capital Trust is planning to build over 500 homes for rent in Manchester, while Stanley Dock Properties want to build over 100 homes for rent in Liverpool.
Elsewhere, Imperial West is eyeing the construction of 192 homes for private rent in Hammersmith and Fulham.

Looking at plans for the entire fund, around 80% of the projects listed are in London - reflecting the demand for good quality, private rented accommodation in the capital.

“The private rented sector offers a flexible option to millions of people looking to rent good quality homes,” said Mr Hopkins.

"The Build to Rent fund will give tenants far more choice over where they live and raise the standard of the properties on offer. So I’m pleased that so many developers have applied for a share of our £1 billion fund.”

Ash Griffiths, Partner in Strutt & Parker's National Development and Planning department said: "We welcome policy intervention which eases the route to development in this burgeoning sector, however, although 10,000 units is a good starting point, it will not meet the demand for private rental housing and we would seek planning changes to encourage widespread institutional investment.

"In our view, such planning relaxation would include reduced CIL contributions from the GLA in London and also at a local level to make the development viable to compete with developments for private sales."