What is Build to Rent and why is it good for tenants?
Build to Rent is an interesting development in the rental market that offers some key points of difference and benefits for tenants.
OnTheMarket has this guide.
What is Build to Rent?
Traditionally, landlords take over existing properties and rent them out. They’re houses, flats, sometimes converted shops or offices. Landlords might do some renovation work, or convert a property, but they don’t build from scratch.
Nowadays developers, usually with the backing of large companies or investors, are building properties that are designed specifically for rental rather than purchase as an alternative to home ownership.
What are Build to Rent properties like?
Generally, they are what are known as ‘multi-occupancy buildings’ – flats, apartments or studios.
You could find a gym, a lounge, shared workspace, maybe even a small dining area or restaurant on site — something resembling a small community.
Developments like these recognise that people who rent want something more from their property – a home that reflects their lifestyle.
Where did Build to Rent come from?
One of the first Build to Rent developments in the UK was the apartment complex at the Olympic Village in Stratford. Following the conclusion of London Olympics in 2012, those properties were made available to private tenants.
Since then, Build to Rent construction gathered pace and is now a fast-growing sector of the UK property market.
The British Property Federation reports that there are now 167,853 build-to-rent homes underway in the UK – 47,754 are complete, 34,132 are under construction and 80,730 are in planning. In London, there are a total of 77,568 units and outside London, 90,285 units.
Developers are creating high-spec accommodation, many designed by architects and styled by interior designers with quality furnishings to appeal to renters with an aspirational lifestyle.
They often have facilities like Wi-Fi, high-speed internet connections and shared working spaces, which is great for people who are working from home or remotely because of coronavirus restrictions.
Many Build to Rent tenants are making long-term commitments to rent, taking advantage of the long tenancies on offer.
To add to their appeal, many Build to Rent properties are located in central areas of cities close to amenities.
How are Build to Rent properties different?
With amenities like gyms, games areas, cafes and lounges on site, many of the build to rent properties have a community feel, which is similar to the environment found in shared workspaces.
There are build to rent properties in London that boast a cinema, secret garden and private bar on site.
With communal areas to manage, developers also provide a range of services on site, some with a resident manager to help sort out any problems that might arise.
Rental growth in the UK
As more build to rent properties are completed, renters will have greater choice, particularly in prime locations.
This is good news for renters because demand for rental properties remains high given the difficulties of getting on the property ladder that still exist, despite an array of Government schemes to encourage home ownership.
The economic damage wrought by the coronavirus pandemic could also leave many aspirant homeowners having to rent for longer than they would otherwise like.
With the supply of private rental properties struggling to keep up with demand, the result will be rising rents and a shortage of suitable rented homes.
Build to Rent is helping to redress the balance.
Are Build to Rent properties affordable?
Build to Rent developers do not need to make all their properties affordable.
The are expected by the Government to provide at least 20 per cent of their units at an affordable level of rent, that is a minimum of 20 per cent below the local market rate, but the rest do not have to be affordable.
Unlike providers of different forms of affordable housing, Build to Rent landlords do not need to be registered providers.
Indeed, with often high specifications, service and community facilities, rents can be around 11 per cent higher than equivalent private lets.
Who does Build to Rent appeal to?
Build to Rent properties are proving popular with tenants in their late twenties to early thirties. New developments tend to be in tune with their social communal lifestyle and aspirations.
However, developers are now widening the concept and recent projects are providing a mix of apartments and small individual houses with long leases for young families.
These developments offer a different type of community with after-school clubs, meeting areas for parents and green spaces. They are usually close to schools and parks, all within walking distance.
Like other build to rent properties, they would feature communal facilities that appeal to students.
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