A new kind of renting is taking off in the UK, after the idea was imported from the US back in 2012. This kind of top end renting is not aimed at first-time tenants saving for a deposit but designed for the UK’s high flyers, wishing to live a ‘professional lifestyle’ in the city.
In London’s Shoreditch area, eight brand new industrially chic apartments are ready to be occupied. They offer striking modern wall art, smart steel framed windows and balconies overlooking the city.
Developments of this kind, which are purpose-built for renters, have professional landlords, often supported by institutional investors and pension funds. Apartments in the scheme are mostly in central locations for work with gyms, swimming pools, saunas and all the mod cons that you would find in some of London’s top hotels.
It has been suggested that the scheme could be one of the major solutions to the UK’s widespread and chronic housing crisis. However, at a cost of £4,800 per month, the three-bedroom flats will be out of reach for most families. Another two bedroom flat in Shoreditch is currently on offer for over £6,000 per month.
Nick Whitten of property firm, JLL, said: “Initially, almost all investment was targeting schemes aimed at young professionals in luxury city centre locations, attracted by the potential for higher returns from this relatively wealthy group.”
Head of consultancy at property group CBRE, Helen Gray, said the industry was missing a trick: “When the sector was first emerging, there was a clear focus on building luxury homes in London and Manchester. The concept was new and there was a lot of nervousness from investors.”
Ms Gray said that, of the mainstream rental market of 2.5 million households across the country, almost 500,000 properties are lived in by students and the rest lived in by single workers and families on a low income.
The majority of renters live on the outskirts of twenty UK cities, including Birmingham, Manchester and Leeds, and a more affordable build-to-rent scheme was required for these tenants.
The build-to-rent sector is now worth approximately £2.6 billion and evolving to cater for more families and older people, as the housing market fluctuates. As housing deposits are becoming harder to save up for, families are now looking to rent for longer – and long-term letting agreements are the industry’s new priority.
Since starting in Manchester and London, the build-to-rent movement has introduced more affordable options to the south coast of England. Professional landlord, Moda, plans to develop a £220 million urban village in Hove, East Sussex, comprising 860 new homes. The properties will have outdoor space and residents will have use of the complex’s own ‘MyModa’ app, which can be used to book services such as laundry or childcare.
A minimum five year tenancy agreement will provide a sense of security to those tenants worried about having to move on when they have only just settled into a property and will allow them to make longer-term life decisions.
Across the board, more rental properties are needed to house people ranging from high end earners to low income families and the elderly, which reflect the evolving needs of tenants. A sense of security through longer term rents, pet-friendly homes, properties built for families, space for a car, or even social opportunities all need to be considered alongside affordability.
With the affordability and supply crisis of current times, build-to-rent properties may be the answer for people saving for longer to build a deposit on their own homes. The homes could even lead to a change in culture, changing the expectation of purchasing property to a new norm of long-term renting.
Back to October 2018 NewsletterÂ
© www.PropertySurveying.co.uk
ME/SH/LCB