Over the past ten years, the number of private renters has doubled, with 20% of people now living in rented accommodation. There is a need to meet this increasing demand, and build to rent may provide the solution.
The rise of build to rent
Build to rent are new build developments designed specifically for residential lettings rather than sale and to help meet the increasing demand in the rental sector, build to rent is expected to more than double over the next five years, with the British Property Federation predicting a staggering 200,000 build to rent sites being developed within the next two years.
What’s the attraction of build to rent?
So why are more investors, including John Lewis Partnership, moving into the build to rent developments and why are such developments attracting more tenants?
• Demand for rental properties makes build to rent developments a good investment with the potential for healthy returns.
• Potential tax incentives for developers of build to rent properties
• For those who choose not to buy or can’t afford to, more bespoke developments offer more and better quality rental options.
• Developments are maintained by a single landlord, with a clear line of responsibility, complaints procedure and reassurance that these properties will be well maintained.
• Longer tenancy options offer security for tenants.
• Rent structures are clearly set out, including a basis for increases and no upfront fees such as admin charges, attractive to tenants.
Points of caution
As with any investment, there are points of caution for a would-be investor to consider:
• Tenants don’t always want to be locked into the longer tenancy terms which property owners prefer to guarantee their income.
• It isn’t easy to find lenders for these schemes, so the initial capital may have to come from the developer’s own resources, favouring larger investors.
• This is not a way to a quick return on investment.
• The high-end spec of build to rent properties makes them more expensive to rent and may exclude many potential tenants.
• Larger tenancy blocks need a professional management system in place to ensure legal obligations are being met, the property is well maintained, and tenant safety is protected.
Meeting future expectations
Build to rent developments are setting higher standards for rental accommodation, offering more facilities such as communal areas, gyms and workspaces and providing homes in areas with good local amenities, transport links and access to work.
The type of tenants they attract are also likely to expect a high standard in building management, so having the right processes in place to ensure standards keep being met, especially when you are making this level of investment, will be critical to ensure maximum occupancy.
Building specifically for a rental market should be a win-win for property owners and tenants so long as both offer what the other wants. It will be exciting to see the impact this sector has on the evolving rental market.
No Letting Go
If you want to discuss how our local support or national network at No Letting Go could become your inventory partner, streamline your cost and reduce your workload, then contact No Letting Go today.
Keep up to date: Free newsletter
You might also like
Build-To-Rent Sector Continues To GrowUpload on September 30, 2021 by Lydia Horsley
The future looks bright for build-to-rent investors and tenants. Even during a downturn triggered by the Covid-19 pandemic, build-to-rent fared better than other parts of the rental sector, and it looks to go from strength to strength. Where it all began Build-to-rent is not unusual in other parts of the world, such as the USA [...]READ MORE
Where Are The Top 10 Build-To-Rent Areas In London?Upload on September 30, 2021 by Lydia Horsley
These are exciting times for the build-to-rent sector as these purpose-built rental properties begin to change the face of the rental market and raise tenant expectations. A key attraction of this type of development is the sense of community it can foster; if this is important to you, where are the best neighbourhoods to locate [...]READ MORE
Block Management and Fire Safety for Changing TimesUpload on August 20, 2021 by Lydia Horsley
Landlords and letting agents know the importance of looking after their properties and tenants in protecting their investments, but we have witnessed changing times over the past eighteen months. What new challenges to fulfilling these duties do these changes present? The essential work of block management To ensure proper maintenance of a residential block, inspections [...]READ MORE