Build to Rent are new build developments designed specifically for renting. They come with a range of perks from longer tenancies to a dedicated on-site manager and purpose-built communal spaces, as well as a premium price tag.
Build to Rent (BTR) refers to purpose-built housing designed for rent rather than sale. Schemes usually offer longer tenancy agreements and are often professionally managed by the owner or operator. With a lack of affordable housing and UK house prices and rent soaring, Build to Rent developments are an attractive option for investors seeking long-term returns.
The properties in the Build to Rent model are not owned by landlords but by a variety of different companies whose sole focus is on building and then managing a long-term investment that is secure, stable, and attractive to renters. On the flip side, those renting Build to Rent properties are already finding they are living in new, well-furnished properties that are often in the best locations in town. And not only are the locations better, driven by the likelihood of better areas leading to an increase in value over a period of time, but the facilities are too. We are already seeing Build to Rent properties coming with communal living spaces, gyms, games rooms, concierge services, and parking provision, all of which is taken into consideration from the off, on an understanding that the people who will be living there will have needs that they want to meet.
What is Build to Rent?
Build to Rent describes new build apartment blocks that have been built specifically for renters. They have to include at least 50 homes and they are all owned and managed by one landlord.
They have been created to address many of the problems that renters face from short-term leases to unscrupulous landlords to sky-high fees.
The number of Built to Rents currently available is small – there are 20,800 across the UK – but it is a growing area.
There are a further 118,000 under construction or in the planning stages. The British Property Federation predicts that there will be 200,000 Build to Rent sites being developed within the next two years.
Given that there are an estimated five million rental properties in the UK, Build to Rent represents a very small percentage, but it is growing.
What are the benefits?
Build to Rent could address a lot of these problems.
PROBLEMS WITH RENTING
- One in six renters are on short-term leases
- One in six renters say their rent was unfairly increased
- More than a third of renters struggle to get their landlord to carry out essential repairs
- Over a third of renters face high upfront charges for example for inventories or references
BENEFITS OF BUILD TO RENT
- Build to Rent homes have longer tenancy options of over three years
- The rent is clearly laid out including any basis for the increase, which should be linked to a formula
- Developments will be maintained by one landlord and must provide on-site management
- They don’t charge up-front fees other than deposits and rents in advance
The big benefit is having one landlord responsible for managing and operating the whole development. This should make it easier for tenants to get in touch with the landlord and get problems resolved quickly. But, an added benefit is the landlord must have a complaints procedure in place and be a member of a recognized ombudsman scheme. This means if things do go wrong tenants should have a clear way to complain and get issues addressed.
Will Build to Rent make things better for renters?
Build to Rent could be significant. Almost half of renters told us that paying no additional up-front fees beyond a deposit and rent advice would have a major positive impact on their rental experience.
On top of that, 40% said they would appreciate renting directly from a responsible company or housing provider rather than a private landlord or lettings agent.
Over a third said renting a high-quality home that complied with safety and energy efficiency standards would significantly improve their rental experience. That’s hardly surprising when you consider that more than a third of renters can’t currently get their landlords to perform basic repairs or provide them with a warm, dry home, according to our research.
The disadvantages
So, are there any disadvantages to Build to Rent? Yes. Firstly, there aren’t enough developments and they are very concentrated in London at present. As of March 2019, there was 20,800 Build to Rent homes across the country, with 12,000 of those in London.
Secondly, you may not qualify to live in the existing Build to Rent developments. That’s because many of the ones that are already built are targeted at specific demographics such as over 55s young professionals or people with pets.
Finally, and most significantly, living in a Build to Rent property isn’t cheap.
Is Build to Rent affordable?
All the benefits of Build to Rent don’t come cheap. The extra facilities and services mean the average rent on these developments is higher than the norm. JLL’s Build to Rent Report 2018 found that the average rent on a Build to Rent home was 9.3% higher than the average rent for the local area. In London Build to Rent homes cost an average 8.4% more than other rental homes.
With many offering communal workspaces, laundry services, concierge, event spaces, and gyms it isn’t surprising they can come at a premium. But this high-spec living is only likely to be affordable for high-earning young professionals.
Alternatively, visit Fortess Homes. if you are looking at a rental property in a new development.
