Build to Rent is set to shake up the tradition and build a new future for the UK property market.
The UK property market is undergoing great changes at the moment with the number of renters and investors growing higher than ever before. A recent report, brought together by Addleshaw Goddard, predicts a huge increase in Build to Rent market over the next five year.
Built to Rent is billed to start a ‘rental revolution’ and here are the 4 main ways it is going to enhance the UK private rented sector.
#1 New Money
A new channel of investment in the private renting market will grow the number of UK new builds beyond the means of traditional housebuilders.
The report shows a wide source of new capital with the majority coming from institutionalised investors backed by insurance businesses or pension funds.
Research by Savills estimates that in the next five years £30 bn will be invested in the PRS through Build to Rent, creating 150,000 new houses and paving the way for thousands more.
The Government has also aided Build to Rent investment, boosting the Rent Sector Taskforce by backing a new bond scheme run by Venn Partners to encourage investors.
#2 More Choice
This new wave of investment and investors will help diversify and professionalise the private rented market, improving the choice available to renters.
The Government have estimated that 1/3 people will be living in rented accommodation come 2032, rising from the current 17%. An increase in customers will necessitate a varied market and ultimately developers focusing on different price points for renters.
The report shows this increase in diversity would be realised with additional facilities such as in-built gyms aimed at higher market points or purpose built crèches designed to attract a specific demographic.
A ‘win-win’ with higher quality builds leading to long-term renters.
#3 Higher Standards
Build to Rent houses would have their intended purpose considered from the outset, leading to a greater service and quality of housing for renters.
The report stresses that both quality and creating a community are vital to maintaining long-term renters and therefore avoiding costly void periods; with this model both the renters and developers win.
Communal areas will be vital in new Build to Rent development, from an in house reception to a communal seating area, but, unlike other new builds, quality will not being sacrificed for the bottom line.
#4 Greater Stability
PRS and Social Housing have not been able to cope with demand by themselves. Build to Rent does not only add diversity to the market but directly tackles the problems of growing renters and the lack of new housing.
If the UK follow the American model, we could see public listed Build to Rent business with the opportunity to invest in the property market without the need for mortgage debt.
With the level of investment and development already picking up all across the UK, it will not be too long before Build to Rent becomes a central part of UK property tradition.