Property developers across the UK are finding new ways to improve the renting experience for tenants – and ‘Build to Rent’ is one of the latest movements that aims to achieve this.
Figures from the British Property Federation state that there are over 250,000 Build to Rent houses in the UK, with just over 78,000 of these fully complete. While this is still a small fraction of the total UK property market, it is a sector which is growing, with companies such as John Lewis and Legal & General investing heavily in developments in recent times, and aiming to sell their flat fast.
In the blog below, we’ve explained what exactly Build to Rent is, what the pros and cons of it are, and whether it might be worth pursuing for you.
What is Build to Rent?
Build to Rent is a development that has been built with renters specifically in mind. It is typically paid for by a major property development organisation and aims to offer renters in the area a higher-quality experience.
Build to Rent aims to combat many common challenges of renting a property, such as short leases, lack of communal facilities and/or lack of support staff working in the building. Instead, these developments aim to create a sense of community, and guarantee that the lease on the property is always long enough that the tenant doesn’t need to worry about it.
Advantages of Build to Rent
Build to Rent developments usually have a strong sense of community. All the people living there are in close proximity to each other and tend to be from similar socio-economic backgrounds. The development will often host events that bring all the residents together – creating a great way to make new friends.
With recently developed Build to Rent properties, the facilities are typically superb. Communal gyms, gardens, roof terraces, lounges and coworking spaces are often state-of-the-art, and therefore make it easy for tenants to work, relax and play.
Customer service for renters living in a Build to Rent development is usually excellent, too. There is often a concierge that supports residents in any way they can, and tenants will also receive other amenities such as WiFi, building maintenance, vehicle storage, parcel lockers and more.
Lastly, many Build to Rent developers will offer a tenancy agreement of 3 years (or more) to renters. This gives the people living there the security that they will have a stable home for three years and won’t be kicked out anytime soon.
Overall, Build to Rent developments aim to address the shortage of high-quality, community-focused renting options that exist for people across the UK.
Drawbacks of Build to Rent
The numerous facilities and amenities of Build to Rent developments means that it is not always an inexpensive option. A report from JLL found that Build to Rent costs 12% more than the average market price for tenants in any given area. Therefore, while it comes with lots of exciting, convenient features, you will need to pay more to stay there.
Another common criticism of Build to Rent properties is that they ‘lack character’. Almost all of the buildings have been purposely designed for mass renting, which means that if you’re looking for rooms customised to each resident, or old-fashioned, charming features like fireplaces or milk doors, then you are unlikely to find it in a Build to Rent location.
Some people do not enjoy living in such close proximity to other renters, as is typically the case in a Build to Rent development. For sociable or extroverted people, this can be ideal, but if you enjoy peace and quiet without bumping into others on a daily basis, then it might be better to find a property slightly less ‘in the thick of things’.
Currently, there is not an option in most Build to Rent developments for the tenants to purchase their property. By contrast, it is not uncommon for landlords in ‘typical’ rental units to give their tenant the first opportunity to buy their apartment, before it goes on the market. Therefore, some argue that Buy to Rent does not provide a clear pathway to helping its renters get onto the property ladder.
Why is Build to Rent needed?
There is a growing need in the UK for additional short-term housing options – and Build to Rent offers a solution to this.
It is currently estimated that the need for additional housing in the UK is between 232,000 and 300,000 units per year. A Build to Rent development typically makes excellent use of square footage, providing hundreds of new homes in the same building, and therefore meeting the local need for housing.
Most UK renters are in the 16 – 34 age range, and many of these people take several years to raise a large enough deposit to buy a house themselves. In the meantime, as they try to save up enough for this purchase, Build to Rent offers a high-quality living situation where they can often live close to a city centre, and enjoy being sociable throughout their 20s.
There are also steps being taken to make Build to Rent slightly more affordable. The UK Government’s guidelines recommend that all Build to Rent developments should have 20% of the site designated to affordable housing – and a local authority can increase this percentage, if they wish, before they grant planning permission for a development.
How expensive is Build to Rent?
The average Build to Rent property is more costly than an equivalent privately rented house. This is because of the additional facilities and amenities that the residents have access to.
Research suggests that the average Build to Rent tenant spends 30% of their income on rent. This is in comparison to 33% of income for the typical private rental tenant.
The monthly rent on a Build to Rent property will vary significantly depending on its location in the country. For example, lots of BTR developments in southeast London and Kent are between £1,500 to £2,000 per month, while it will tend to be considerably cheaper further north.