Britain is on the verge of a rental revolution with around £30bn of institutional investment earmarked to build and manage homes for rent, according to a new report to be published on Monday 3 August.
The report highlights the importance of good design to the future success of the sector. Developers will need to look beyond traditional residential layouts and instead create homes that foster a sense of community.
‘Funding Britain’s rental revolution’, by Addleshaw Goddard, a law firm and the British Property Federation, a trade body, says Build to Rent could bring in substantial additional finance for housing.
Getting tenants to know their neighbours will help encourage them to stay for the long-term, saving operators money on costly voids. Key to this will be creating user-friendly ‘dwell’ areas that encourage circulation within the flat buildings.
Much of the concept around Build to Rent is borrowed from North America’s multifamily sector where listed companies own much of the housing stock.
Many of the Build to Rent schemes coming forward will include a range of communal space throughout the buildings. This could include top floor amenity decks in the place of penthouse flats allowing all renters to benefit from the views and additional space. Others will be simpler, such as a lobby area with shared seating. Crucially, all schemes will be of a decent quality.
The shift towards a professionally run rental market – with developments owned by single companies rather than multiple speculators and buy-to-let investors – promises to offer Britain’s nine million renters higher standards, better value and greater transparency with homes purposefully designed for renters, according to a new report.
Institutions such as APG, Hermes, and Legal & General, together with companies such as Grainger, Essential Living and Fizzy Living are spearheading the new sector. It comes as chancellor George Osborne has reduced tax breaks for buy-to-let investors following a Bank of England warning over the risk it posed to economic stability.
Build to Rent has emerged as a separate new asset class, distinct from commercial real estate and buy-to-let properties that dominate the housing the private rental market. There are now dozens of high profile schemes in the works.
Around 29 per cent of housing starts in London in the first quarter of 2015 were homes for rent while many predict that renters could soon outnumber homeowners, making the delivery of rental homes crucial.
Marnix Elsenaar, head of housing at Addleshaw Goddard, said:
“Build to Rent has the potential to vastly improve standards in housing and because companies invest for the long-term, they are more open to innovative design and more creative approaches which keep customers happy. Crucially, the sector will deliver additional housing supply and around £30bn of new finance could be forthcoming.”
One scheme currently under construction is Old Oak by specialist developer The Collective in Willesden Junction north west London (pictured left). The Collective Living model is providing ‘rental accommodation modelled on a unique shared-living concept’ with ‘beautiful living spaces for the young and ambitious who long for conveniences of serviced apartments and appreciate the luxuries of boutique hotels.’
Properties are made up of a number of different room types to suit individual needs, from en-suite rooms with shared kitchen facilities, through to standard and large studios, with leases typically starting at 9-12 months.
See The Collective website for more details.
Source: Property Reporter