Is Build-to-Rent the Future?

There is a shortage of homes in the UK but a high demand from homes.

Build-to-rent (B2R) is a subdivision of the UK’s booming private rental sector and, as the name suggests, concerns new builds designed specifically for renting rather than for sale. They tend to lie at the top end of the rental market and achieve a high volume of enquiries when eventually placed on the market.

B2R numbers aren’t as high as the government would like and so an online consultation has recently been opened to encourage authorities to plan for build-to-rent schemes, closing on 1 May this year. This is in line with a wider £1 billion fund to support private investment, planning and construction within the industry.

As a property investor, they are something worth taking a look at, especially if schemes are taking place in areas of interest to you. The British Property Federation have produced a digital map detailing current build-to-rent projects here, many of which are located around London, Manchester and Liverpool.

 

Housing Shortage

The appeal for more B2R projects echoes the greater demand for more homes across the country. Some reports suggest a staggering 250,000 new properties are needed annually to keep up with demand.

The government has pledged to build an additional 1 million properties by 2020, although this is looking increasingly unlikely with such a big national deficit and debates over green belt construction still waging on.

This is why there’s been encouragement for build-to-rent schemes, essentially as the government seek to pass more responsibility onto the private sector.

There is a shortage of homes in the UK but a high demand from homes.

 

Demand for New Builds

New properties have always been favoured by the general public, mainly because they’re constructed to the latest specifications, less likely to fall into disrepair and also designed to be energy efficient – this brings down utility bills in the long term.

In B2R accommodation blocks, facilities can include gyms, swimming pools, games rooms, communal gardens and free Wi-Fi. This will not only attract residents in the first place, but also ensure they’re happy to stay for many years.

There's a high demand for new builds as they're built to the latest specifications.

 

Rental Sector

There’s a recognition that prospective first-time buyers and young professionals are being pushed into the rental sector. Investors thus know that building homes specifically for rent is a safe investment as the demand is more resilient.

This is a view endorsed by Edward Douglas, Policy Manager at the think tank ResPublica, who says:

Those building-for-rent can do so with more confidence that they will have customers to move in when they are finished. In 2017, we should see a huge shift towards B2R, with tens of thousands of rented homes expected to be built.”

More people are being pushed into the rental sector, creating a demand for rental homes and build-to-rents.

 

Build-to-Rent 2017

As ‘generation rent’ become increasingly likely to seek out high-quality new build accommodation, this makes build-to-rent a safe bet in 2017. Location and amenities are still the key, especially if you can find a B2R scheme in one of the UK’s buy-to-let hotspots such as Manchester, Leeds or Liverpool.

The process is made far easier if you hand control of matters to a qualified letting agent, usually part of the developer’s offer, who will find and manage tenants on your behalf.

If you’re unsure about where to invest, you might be interested in why the North is the best place to invest in property right now.
If you’re ready to invest, why not take a look at what investments are available right now or get in touch to find out more.