The term build-to-rent, refers to developing a property with the exclusive appeal towards the rental market, as opposed to home ownership. Although still a relatively new concept, the idea of build-to-rent has been around for a few years now.
Now more than ever, we are seeing a thriving increase in BtR properties with the increase in rental sectors, as individuals are seeking more flexibility and less commitment pertaining to their location and housing situation. Particularly now, people are choosing to rent instead of buying - These changing attitudes in society have allowed landlords and property investors to adapt to the needs of their tenants, offering more lucrative properties featuring a higher standard of accommodation, which offer a better quality of life and add to their tenants ’satisfaction.
Developers are designing BtR properties with their clients ’in mind to cater around their lifestyle. As remarked by Petty Son & Prestwich (2021) “Developers are now creating, or at least trying to create, mini communities within their developments by including features such as communal areas where people can hang out and socialise together.” These developments are inclusive of amenities such as gyms, lounges, bars, games rooms, dining spaces, some even contain work spaces suitable for those working from home.
Along with the following perks, not only do BtR properties offer luxurious living conditions and attractive architectural infrastructures, but they also help to regenerate rundown locations by creating a more idealistic scenery with the help of landscaping projects, which helps to further contribute to and boost the local economy and its ’capital gains, not to mention the increase of jobs required to complete these large development sites.
There has been an increasing boom in the rental market, with specific linkages to the build-to-rent (BtR) sector. 25 BtR schemes were permitted full planning permission with a magnitude of up to 7,000 homes this year. This capacity alone has achieved the highest level of planning permissions granted in a single quarter in one given year. This quarter alone has received a substantial investment worth £1.2 billion.
To further add, the total size of the sector as reported by Savills (2021) positions itself at 57,700 completed homes, with an additional 36,000 homes in development. The foreseeable future of BtR properties stands at 94,700 totalling to an astounding 188,500 homes once all of the developments have been completed. The build-to-rent scheme is offering a viable positioning in the rental market, assuring high rental yields and a solution to landowners and prospective landlords looking for more flexibility and leverage in the construction of their properties.
There has been a surge in Build-to-rent properties within the prosperous hotspots of London, Manchester, Birmingham, Liverpool, Leeds, Glasgow and Sheffield. Demonstrated on a year-by-year basis in regards to rental increase, Newcastle, Manchester, Leeds and Birmingham are all seeing an ever-increasing return on investment. Newcastle ranks first with a current average monthly rent of £858, indicating a 17% growth from last year. A 6% growth and an average build-to-rent rate of £892 is shown by Leeds. Birmingham and Manchester each stand with a 3% rental increase from the prior year, both of which are proving to be upcoming and emerging locations for the future of property investments and build-to-rent schemes.
A drawback towards BtR housing schemes encompass the idea of affordability, a somewhat subjective term in reference to the rental market and societies views. With the ongoing outbreak of the Coronavirus pandemic, many still live life worrying about job security and whether they’d be able to afford rent with a sudden change in their income. Nevertheless, with stores re-opening and life getting back to normal, the future is beginning to look more promising and stable.
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