As children we grow up drawing pictures of houses. A family in the garden with a white picket fence. Society seemed to suggest that this was the answer. It was the route that we would take. Society has other things in mind. The debate between renting versus owning is the same as other key arguments. Personally it comes down to preference. There are benefits and drawbacks to both sides.
The environment though has changed. Since 1990 alone there has been a significant increase in the number of private renters, and in 2017 this was estimated at an additional 2.5 million more households renting privately.
Build-to-Rent, high-quality and professionally managed homes designed specifically for private rent, are on the rise. In the recent BPF report it was
estimated that as at 30 September 2021 there were 76,804 homes in London’s Build-to-Rent pipeline alone. The real opportunity now seems to be in the regions which is seeing a significant increase of opportunities coming out of the ground. The impact of Covid-19 is becoming clearer and it seems that despite some disruption in Spring 2020 things are moving back on track.
Across the UK there are nearing 50,000 completed BTR homes with over 30,000 more under construction. The pipeline further afield is ever growing across all cities in the UK.
There are significant schemes, as expected in London, but schemes are starting in the regions: Kangaroo Works in Sheffield and Dock 5 in Salford have spades in the ground! There is a significant potential for growth in the regions for key operators.
BTR is providing a new experience for people. In a modern world, a more convenient experience. Well located in core cities, tapping into a population of individuals, couples and families wanting the city life. Typically you see BTR offering: resident lounges, gyms, roof gardens, guest rooms for hire and more. More importantly they provide access to green space. No longer the tower blocks with little green (other than the moss growing up the side) but open spaces providing access to high quality public realm and linkage to amenities. Lastly technology thrives in BTR. Tech-enabled property management systems, apps that connect the customer with the BTR operator and amenities and connectivity allowing you all the access you need.
Built-to-Rent accommodates many. There is a larger proportion in the 25-34 year old category representing young professionals and similar across private and public sectors. Couples and those sharing make up a large proportion of tenants BUT there is a growing base of families and certainly developers live Moda Living are specifically targeting families by offering the amenities families need. Remember, as I started, if you grow up in BTR you’re likely to stay in BTR (it’s what you know) and having spaces that accommodate for all means you just move around in the same community.
There are clear strengths for the BTR product. The growth of investment in the sector shows a clear appetite for investors. They represent a stable and long-term income stream – good for those looking for an element of annuity income. Generation Rent has grown and BTR provides additional variety and choice for renters. High quality management and a professional service allows for a streamlined service for tenants / customers – not dealing with an individual landlord. A product that just provides more than the standard.
The other side of the argument is how tenancy lengths work. In theory they are flexible but clearly an operator would want/seek for longer. Affordable housing requirements are needed across the UK – it is unclear if all BTR developments are offering an appropriate level. The financing is different in that the return is over time via rental income – so lends itself to a specific type of business.
Despite the good and bad , the future for BTR is very clear. Despite the economic impact of Covid-19, the long-term fundamentals of renting remain and with affordability issues, stricter lending criteria and a rise in unemployment as the Government’s furlough scheme eases will likely see first- time buyers delay the long-term commitment of home ownership until the wider economy recovers.