The Build to Rent (BtR) sector has been rapidly growing in recent years. Quickly becoming a housing trend in 2022, Build to Rent promises even more growth in the years to come.
As the demand for affordable housing continues to outnumber supply, and younger generations enter the property market with a preference for private rentals over traditional home ownership, the Build to Rent model could be the answer to the housing market’s struggles.
The Build to Rent sector has not only been resilient throughout the pandemic, but it also has the most potential for adjusting to the new priorities revealed by the pressures of COVID-19. As people return to an urban lifestyle, many still maintain flexible homeworking, and seek access to outdoor and communal spaces that can enrich their lives outside of work.
Build to Rent offers opportunities for new creative schemes and ways to rethink and reshape city planning and British communities, so is it any wonder that this sector is on the rise?
This blog from Architects Certificate looks into the long-term potential of Build to Rent, and what it can offer for both developers and occupants.
As the name suggests, Build to Rent (or BtR for short) involves building property specifically for renting rather than selling. The aim is to provide purpose-built quality housing, with professionally managed facilities that enhance the experience compared to the Private Rented Sector (PRS).
These developments differ from PRS schemes, which usually involve a private landlord owning a portfolio of separate ‘buy to let’ properties. Community-focused Build to Rent developments are professional larger-scale projects owned by property companies and institutional investors.
The BtR model appeals to developers and residents alike by prioritising quality and longevity. It does this by focusing on meeting resident needs to maintain occupancy levels, such as:
When delivered properly, a Build to Rent project makes the most of existing infrastructure and helps to boost the local economy while strengthening the local community. It’s also good news for other investments in the surrounding area, whether in the commercial or public sector.
Institutional investors are keen to back the Build to Rent sector in its burgeoning stages as a more sustainable alternative to the current Private Rented Sector. With the BtR approach, maintaining customer loyalty through consistent high-quality services leads to predictable long-term returns.
The benefits of Build to Rent for investors and developers include:
While it began as a way of supplying high-end property to renters with high disposable income, the growth of BtR is being driven by mainstream renters looking for good homes with secure tenancies.
One of the major differences that makes Build to Rent properties more appealing than private sector ‘buy to let’ rentals is that they actually focus on renters. These developments are purpose-built to cater to tenant needs, providing a better experience and encouraging long-term occupancy.
The benefits of Build to Rent for tenants and leaseholders include:
It’s not surprising that people of any age would embrace the chance to live in specially designed homes promising a superior lifestyle, with easy access to every amenity they might need.
The Build to Rent movement may have first taken hold in London, but now it’s spreading across the UK to deliver much-needed homes in several regional cities. This expansion into new areas will help to address the shortages of affordable housing in places that desperately need a new supply.
Lifestyle trends may have been changing towards Build to Rent before the pandemic, but COVID-19 certainly was a catalyst that accelerated these social changes. With homeworking now widely favoured over commuting, and greater emphasis on wellbeing and family, more people want the mix of living, working, and leisure facilities that a Build to Rent development can uniquely offer.
This model is also proving to be just as appealing in suburban and even rural contexts as it is in urban centres. High-spec yet affordable housing units with a vibrant community offering can mirror city living in less densely populated areas, too, where there is more space and costs are lower.
According to Savills, rental growth is likely to outpace the inflation of house prices over the next 5 years, improving the viability of new markets and sites for BtR investors. During the first 6 months of 2022 alone, at least £2.5 billion was invested into the UK Build to Rent market, which includes the highest second quarter on record for this sector.
The figures also reveal that there is now a stock of 73,700 completed BtR homes in the UK, and 47,800 more currently under construction. With a future 115,900 homes in the pipeline, including pre-applications, the total size of the BtR sector is 237,400 homes completed or in progress.
Single-family BtR homes are seeing the highest growth, with a 44% increase over the last year, proving the viability of the demographic expansion beyond young professional singles or couples.
Business may be booming for Build to Rent, but even property trends need proper insurance policies. This includes latent defects insurance, also known as a building warranty, which protects investors and owners if damage to the building results from poor design or workmanship.
This type of Build to Rent structural warranty can protect you in case of contractor insolvency down the line, and helps to minimise the risk of structural damage through robust quality assurance.
With the government consulting on new standards for rented homes and secondary legislation for the Building Safety Act, the regulations will become increasingly stricter, so it’s best to have your development inspected from start to finish as part of your structural warranty services.
To find out more about Build to Rent structural warranties, visit our dedicated page today.
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