THE COMPLETE GUIDE TO UK BUILT TO RENT
THE UK'S NEXT PROPERTY BOOM!
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Chris, BA Hons Architecture, MCIAT, MCIOB
Senior Technical Manager Countryside PLC
A detailed dive into the design and technicalities of the build to rent market. This book truly allows the reader to gain first-hand knowledge and takes you from complete novice to be able to hold your own in the Build to Rent arena.
WHY I WROTE THE COMPLETE GUIDE
The property market is an area of constant ups and downs, which has been predominately on the up in recent years.
2020 is no exception, with reports in August detailing how house sale prices had jumped to a new record, with the average being £245,000 according to one of the biggest mortgage lenders.
This was an increase of 1.6% on the previous month and 5.2% when compared to the same time in 2019 – the fastest annual increase since late 2016. The reason for this has been attributed to the stamp duty break on the first £500,000 of a property purchase following the COVID-19 pandemic.
Due to this, there was a slight dip in the average UK rentals, which fell by 0.8% between April and June, which can also be attributed to the recent pandemic.
However, despite these good fortunes in the property sales market, things are expected to take a turn towards the end of the year.
It has been estimated that there will be a 13.8% fall in house prices in 2021. But, on the opposite side of this, there has been a recent emergence of a two-speed rental growth market.
So, despite there being a slight dip, when you venture out of London, the rental market has seen an increase. This is great news for investors.
And, for those looking to invest in the rental market, which is experiencing a huge demand, build to rent (BTR) is an area many should look into as the new forefront of the UK’s rental market.
WHAT IS BUILD TO RENT?
With the UK rental market continuing to grow over the last 20 years, BTR is an emerging sector that’s been hugely inspired by both the North American and European rental market.
Often referred to as ‘multifamily housing’, BTR emerged due to the high demand for quality rental accommodation, reflecting the needs of modern-day renters.
Built to be rented and not sold, these properties are typically owned by rental companies and let out by an agent.
While the idea may seem new, it has been more than 30 years in the making here in the UK. The 1988 Housing Act, introduced by Thatcher’s government introduced the Assured Shorthold Tenancy and was created as an incentive to boost investment in the private rental sector, which looked very different in the 80s to how it looks now.
Then, in 2012, following the London Olympics, part of the legacy programme was to transform Stratford’s East Village from athlete’s accommodation into private rentals based on BTR.
A rental like one we’ve not experienced in the UK, BTR focuses on the tenant, offering a high-quality service and rental experience similar to those in American films or even at a five-star hotel. This is implemented through such services as:
On-site concierge
24/7 management
Additional tenant living space
Gyms
Laundry services
Pools
And more ...
On top of this, for those investing, BTR developments often include:
A minimum of 50 rental units
Professional, on-site management and services provided
Rental opportunities for at least 15 years
Three-year assured short-hold tenancies
No letting fees
This model, therefore, allows investors to achieve long-term returns while providing excellent rental opportunities for renters compared to what’s already available. Because of the advantages being placed firmly in the court of the renter, this brings plenty of opportunities for the BTR market in the UK.
BUILD TO RENT OPPORTUNITIES IN THE UK
You won’t be surprised to hear that the BTR property investment market is therefore quickly becoming the United kingdom’s fasted growing property sector, replicating what happened in North America more than 10 years ago.
The rental market in the UK has doubled over the last decade. 20% of UK households on average, which is as high as 30% in London, currently rent. It is continuing to grow too, with Rightmove saying it’s recovering much quicker than the sales market, recently noting a 22% increase in demands for lettings.
On average, growth outside of London has been up 2.2%, ranging from 1.5% in the West Midlands to 3.1% in Wales. And it’s estimated that a third of renters will continue to do so due to the rising cost of homeownership.
With the increase in renting, and with it looking long-term for many, it’s no surprise that tenants are on the lookout for excellent opportunities, which is where the BTR sector steps in and can benefit from across the next decade and beyond.
THE CURRENT UK BUILD TO RENT MARKET
In the last five years alone the sector in the UK has grown six-fold.
This has placed the current market value at £10 billion, which is expected to rise to more than £500 billion over the next decade due to rising rental demands and demands for better rentals.
A formidable market in the making, in Q2 of 2020 is was noted that there were 167,853 BTR homes in the UK, and an increase of nearly 10,000 from Q1, where there were 157,512 UK-based BTR homes.
This is continuing to increase, with recent announcements across the UK of BTR homes, including:
A 655 property development to be constructed in Leeds
A 325-apartment scheme designed for Liverpool
A 34-storey tower in Liverpool
A 520 residential apartment, 6,000 square foot build in central Manchester
While the investment opportunities can be seen, for those thinking about the future, it’s best to look at areas where long-term rental demands will be needed over the next decade.
In the same report, Rightmove also revealed where the highest demand for rentals was across the country.
Regionally, the South-West has the highest number, with demand for lettings being 34% higher in 2020 compared to 2019.
This was followed by the East Midlands with a 31% increase in demands for rental properties.
The South-East saw a 28% higher demand when compared to a year ago.
The remaining list looked as follows:
Yorkshire and the Humber (26%)
East of England (25%)
London (23%)
North-West (21%)
As you can see, there’s a constantly growing demand for rental opportunities, and while BTR properties are made with the renter in mind, when it comes to investing and building there’s a broad scope of people who could benefit from them.
Just Stop for a Second and Ask Yourself:
"Will I regret this opportunity if I don't act on it?"
IN THE COMPLETE GUIDE, YOU WILL LEARN ABOUT:
FINANCE
Discover the most important elements about financial models in 2020 and how it can improve your negotiation position.
Learn what investors are really looking for nowadays in BTR.
Get a breakdown of the most important terms in BTR you need to know by heart.
Get a free financial model with a value of £1,500.
DESIGN
Find the balance between solid financial investment and accommodating the high expectations of the tenant.
Get a break down of the key questions you should ask your BTR architect.
Learn the key design principles that improve key investment financial metrics like Net Operating Income.
MANAGEMENT
Find out the secret tricks to improve yield and reduce overall operating cost through outstanding management.
Master the best branding practices that will raise your rental premium by as much as 2.6%
SUSTAINABILITY & BUSINESS LONGEVITY
Uncover proven strategies that will guarantee the longevity of your BTR.
Find the technologies that will help you reduce cost and secure your property’s life cycle and improve profitability.
I immediately sent a passage to my lead architect to educate him on how we could use the principles in one of our pipeline apartments blocks to improve our profits!
Simon Victor
CEO Blue Door Homes
Great overview of the current market, emerging trends and tools to be able to make informed decisions.
E. Crispin, MRICS
Director, Pride Consulting IMS Ltd.
Informative current and to the point, a must read for any property management company / investor looking to take advantage of the BtR model in the new co living era.
Charles Simmons MRICS
Founder The i-Living Group
SO WHO IS BUILD TO RENT REALLY FOR?
While the BTR market could be considered an area most beneficial to investors, with 75% of property investors now preferring the sector, due to the continued growth on returns unaffected by economic downturns, this isn’t 100% true.
The market can benefit numerous people from a wide variety of sectors, which you’ll find noted below.
Designers and architects:
These properties need a different style of design and layout when compared to apartment blocks and housing traditionally associated with rentals, providing new opportunities to learn and grow for those in these areas.
Small private property developers:
For those looking to maximise their return on investment through new solutions, looking to the BTR market could be hugely beneficial in several ways.
Graduates, Students, Young Professionals:
Offering a set-up similar to university and a higher quality of living, these rentals could be hugely beneficial moving forward for the new breed of renter.
Management Staff:
With round the clock management and communal spaces, gyms, laundry services etc, there’s huge scope for those in the management industry in the BTR market.
Hospitality Staff:
With an emphasis on benefitting the renter, many BTR property owners are turning to this sector to find staff, offering new horizons for many.
Consultancy Agencies:
Not everyone has moved into this sector and as more and more investors become aware of it there’ll be more need for consultancy agencies to know about the area, creating added areas within the consultancy business offering.
Other Jobs:
Other job roles, similar to consultancy agencies will benefit from the rise in this sector in numerous ways, such as land managers, agents (all property), capital markets experts, investment brokers, investment analysts, and investment risk advisers.
IT’S TIME TO ACT NOW.
As you can see, the rental market is huge and will continue to get bigger, and with growth comes new horizons. The newest in the rental world is BTR, opening up opportunities across the board for those working in the property sector, which means getting ahead of the game is key in this booming market.
ORDER YOUR COPY NOW. I KNOW YOU WILL THANK ME LATER
Discover everything you need to know ahead of time when it comes to the BTR market with our extensive guides, highlighting all the areas you should be aware of and what you need to know as the market gets set to take over the property rental sector.
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