Purpose-built rental homes are beginning to dominate the private rental sector. According to Buy Association, as renting becomes a more common lifestyle choice, the build-to-rent arm of the industry has boomed with increasing numbers of property investors and landlords now seeing the sector as a future-proof option for investment, which offers more than the traditional buy-to-let approach.
It is easy to see why it has become such a popular option. As demand in the UK housing market spirals beyond what the supply can handle, ripples are being seen in the rental market. As levels of homeowners decrease, the number of renters rises, and property prices are going up in tandem with it.
The Covid-19 pandemic has also caused major shockwaves in the housing market, prompting a cohort of residents to up sticks and move from city centres into more suburban and rural areas to enjoy greater comfort in working from home.
In the wake of this, the build-to-rent industry is now being regarded as a means of satisfying the demand to move out of the city and live in the suburbs. However, as well as that, focusing on building homes specifically for renters is addressing some of the major complaints that tenants have had and is emerging as a possible solution to the housing crisis.
Purpose-built rental homes tend to also be built with the aim of creating communities, given that they tend to entice longer-term tenants. Another major upside to them is that they are often kitted out with the latest in smart technology, containing more up to date features than traditional rentals. A new survey from build-to-rent operator Wise Living suggested that 85 per cent of tenants, desire aspects such as instant connectivity in their homes with access to superfast broadband and TV packages. The need for this has only been exacerbated by the Covid-19 pandemic, with a cohort of home-workers desperate to ensure their properties are well-equipped for their needs.
Anne Malone, head of customer experience at Wise Living, said: “Our findings demonstrate that people want more than the basics from their rental homes - they’re looking for a place that gives them a good quality of life too as for many their home is now also their office. Super-fast broadband, in particular, is no longer just a ‘nice-to-have’ but an essential utility for many households.
“The Covid-19 lockdowns influenced our attitudes towards technology as we depended on it for remote working and streaming entertainment services, but it’s not the only reason. In fact, the survey results reflect the wider changes that have been taking place in the rental market for several years.
“We’re seeing growing numbers of families and older couples opting for purpose-built rental properties in the suburbs, so it’s not just younger professionals living in city centre apartments. This is usually because they’re looking for flexibility and convenience - which explains why they want their homes kitted out with the latest technology too.”
Indeed, the shift toward build-to-rent has been so great that one firm of architects, Chassay+Last, have begun to divert their main focus from providing apartments for sale to catering for the private rental sector, simply because it is a more lucrative business to be in.
Founder and partner, Malcolm Last, explained: “This change of emphasis has involved switching to the construction of apartments for rent which include communal areas. These smaller apartments become part of a co-living space – a new way of living which is becoming increasingly popular.
“Following the same trend, these co-living spaces are being combined with working spaces, where residents can grow their own businesses and share resources. The popularity of these developments has surged over the last two or three years, and this has helped to fuel our recent growth as a business.”
Commenting on the rise of build-to-rent, Sue Winterbourne from Leaders Romans Group said that she could only see the industry becoming increasingly popular in years to come.
“Build to rent has led to rapid growth in the number of planning permissions submitted, an increase of 52 per cent during the pandemic year,” she said.
“My prediction is that this will continue to soar. The increase in submitted planning permissions is due to how attractive this class of property is for developers. Firstly, as a business they benefit from being able to create cost-efficient homes on a large scale. Secondly, the dynamic community-based living it encourages has made many local planning authorities more amenable to granting development permission.
“On the other side of the fence, there are a slew of benefits for renters as well. Most importantly is cost - build to rent developers are constructing high quality housing en masse and this allows them to work out economies of scale with suppliers and keep rent affordable. Tenants are then able to afford properties that are greener, higher tech, and sustainable in specification. This is in stark contrast to older rental properties that have been kitted out to the same spec by private landlords, who would understandably try to recoup this investment by charging more in rent.
“Money is a huge motivator but there are other key benefits for tenants choosing buy to rent, such as longer leases that make laying roots in an area easier and a community feel to developments that is perfect for families.”
With build-to-rent providing such an opportunity for developments, tenants and local councils, Winterbourne believes that the conditions are perfect for the industry to continue to expand.
“The sector will undoubtedly expand exponentially in years to come; the question is where it will go from there. My prediction is that take-up will further balloon due to increased regulations pushing private landlords out of the market.
“I also think that the community aspect will get a further boost from on-site liaisons who will do everything to ensure the smooth running of local properties – an invaluable convenience for busy households.
“The foundations of build to rent are going from strength to strength due to all parties involved in their construction, occupancy, and approval standing to gain from their development.”
Winterbourne has also appealed to housebuilders to ensure they are well placed to help cater for the increase in demand.
“Despite lockdowns seeming like a distant memory, the need for suburban housing is ever present and it is for this reason that homebuilders need get involved at the ground level for sating this demand,” she explained.
“The past 18 months have seen large scale change and uncertainty in the industry. It is now more important than ever that we are ready, not reactionary, to market changes.”
Photo by Blake Wheeler on Unsplash
