What are the benefits of using a specialist managing agent to manage a Build to Rent scheme?
Enlisting a managing agent to manage Build to Rent schemes is fundamental. The expertise, knowledge, and contacts a specialised management company brings to the table is invaluable in ensuring the asset is run and maintained at an optimum level at all times. We have infrastructure, specialist teams and contractors dedicated specifically to the asset management of this magnitude.
How can R&R play a part early on in the design of a Build to Rent scheme such that it makes it a more appealing proposition for tenants and more profitable for operators?
We get involved at point of conception with a number of our clients in order to advise the client of additions, such as facilities or modifications (within their budget) that would ultimately benefit the development in order to make the site more lucrative and more desirable for the residents, giving them an unrivalled living experience that offers everything they need under one roof. Our very unique professional relationships enable R&R to be able to extend significant savings and options to the client that they may otherwise not benefit from.
What are the differences for R&R between managing a Build to Rent scheme and a development that is owned by the lessees?
The difference between the two firstly is the type of asset. A Build to Rent scheme usually sits in a fund and is built specifically as an investment piece and going concern. It exists to generate income, which is achieved via rental income and yields, with the capital gain of the entire asset in mind.
Lessee blocks consist of flats that are all individually owned by people (mainly owner occupiers) rather than funds/entities. The dynamic of the block in this instance is different as it’s not an income generating vehicle in the investment sense of Build to Rent. Blocks with lessees in them pay service charges and ground rent in some cases, on this basis the approach is different as service charge accounting is applied as each individual owner occupier is responsible for contributing to the running/servicing of the communal areas within the parameters of their service change contribution.
If works need to be done to the site in any way that exceeds a certain financial level (this financial level will be site dependent), a section 20 notice must be issued to all residents advising them of the works that are required to be done and the quotes that have been obtained to conduct said works. This is a lengthy process and must ultimately have the approval of all the residents before works commence.
Build to Rent does not have owner occupiers, therefore section 20 notices are not required, and the accounting processes are significantly different on the basis that residents do not pay service charges or ground rents.
Where do you think the Build to Rent market is currently going and what does 2020 hold?
Build to Rent offers renters the ability to reside in a home in their desired location, which they may otherwise not be able to own due to rising house prices and costs of owning a property in the UK. Renting offers flexibility for its residents as these tenancies are usually Assured Shorthold Tenancies (AST’s) which are 12-month renewable agreements with a break clause, allowing the tenant to relocate very easily should they need to do so.
With a rapidly growing Build to Rent sector, the Private Rental Sector has become even more exciting for renters. These new builds are built with the renter experience in mind from conception, offering luxurious facilities such as spas, gyms, resident lounges, cafes and more.
Properties managed by Rendall & Rittner further benefit from our community engagement initiatives such as Recycling Week, The Residents Club, Art Competitions and seasonal parties. Given that statistics indicate a 30% rise in Build to Rent in 2020, the demand for more rental accommodation continues and the need for supply more prevalent than ever.