Build to Rent is changing. Particularly, the demographics opting to live there. The current financial climate is likely to push this recent shift even further – with more people unwilling (or unable) to put down a large chunk of money to buy a property. However, Build to Rent is not just a stop-gap for hesitant first-time buyers who feel uneasy about the looming recession, it has got increasingly wide appeal.
But it hasn’t always been that way.
History of Build to Rent
Up until the recent Build to Rent boom of the last few years, these developments typically catered to students and young professionals.
From student accommodation to those starting out in their careers, Build to Rent was often seen as a temporary solution for those who were unsure where they’d be living in the next few years, or weren’t in the position to put down a deposit.
More investment and a refocusing on consumer experience, however, have opened the sector to new demographics.
The security, service, and quality of the new breed of Build to Rent properties are generating much more widespread traction. Below, we break down some of the groups which hold the biggest opportunity for developers.
One of the largest new groups that Build to Rent developers are taking notice of is the senior living sector. In fact, results from a recent survey from Knight Frank showed that 67% of investors were looking to invest in Build to Rent for senior living in the next five years.
This demonstrates the substantial funding appetite out there if developers can tap into this growth market. But it’s not just care homes – there’s many different models offering varying levels of support for residents. Retirement living spaces offer the flexibility of renting and increased opportunities for socialising, which are a big draw for the older demographic.
Key considerations when developing for senior living:
- Accessibility – designed with the demographic in mind.
- Proximity to facilities – close to shops and other key amenities.
- Range of tenure options – choice over long or short-term leases.
Before, Build to Rent leaned into the communal living angle which appealed to young professionals or students keen to meet new people. Often these developments offered co-living spaces with shared facilities and common spaces.
But now, more frequently, younger families are moving in and the design of Build to Rent properties is shifting to accommodate these changes – particularly in the type of building. Over the last few years, more single-family Build to Rent housing has been making its way onto the market – with an emphasis on the suburbs.
The Build to Rent boom is often seen as an urban phenomenon, but more and more families are looking for rented homes outside of the city. The increased space and larger site sizes have meant that there’s more flexibility in the type of homes that can be built, and it doesn’t have to be the densely built apartment blocks that are often associated with Build to Rent.
Key considerations when developing for families:
- Childcare – proximity to schools, nurseries and childcare centres.
- Location – access to parks and open spaces.
- Number of bedrooms – provide a range of options for different family types.
Typically, rented accommodation was a more temporary solution for those just starting out in their career – providing more flexibility in terms of location and affordability.
Increasingly, tenure times have become longer as the rise in house prices, and the cost of living crisis, has made it more difficult to get on the property ladder. Not only has the length of tenure shifted, but also what this demographic sector is looking for from their rented properties.
There’s still a huge number of professionals working remotely – at least for a few days a week. To do this effectively, they need the right space and resources to make this happen. Developers who can understand the shifting trends and requirements of remote workers could capture a large slice of this market.
Key considerations when developing for young professionals:
- Location – near central business hubs and good transportation links.
- On-site facilities – bars, cafes and gyms.
- Co-working areas – fast internet and meeting rooms to cater to the many remote workers.
Leveraging population data
With these differences between the requirements of different demographics, it can be helpful to choose the location for your new development based on population data. It can help inform where and what you build.
Looking at projected populations for the UK can help pinpoint new areas of opportunity for your specialism. For example, when looking at the future population for certain boroughs in London, it’s clear which demographics are going to be driving housing trends in the area.
For Kensington and Chelsea, there’s a population decline for 20 to 40-year-olds in five years. This would indicate that there’s limited potential in prioritising developments for young professionals or single-family homes.
Islington is set to see a reverse trend with a massive population spike for 20 to 30-year-olds – making it the prime location for developments targeting graduates and young families.
Outside of London, we are also expected to see some surprising population shifts. Surrey is set to see the number of over-60s living in the area increase by up to 10% in the next four years. Coupled with a 3.5% decline in residents aged 20 to 39 over the same period, senior living Build to Rent could hold potential for developers targeting this area.
Ready to start searching for Build to Rent opportunities?
Even once you’ve narrowed down your target demographic and potential location, it can still be difficult to find a suitable site that meets all your criteria. LandInsight, LandTech’s site-sourcing software, can help you find and assess Build to Rent opportunities faster than ever.
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