By Mark Gratton, Development & Land Manager, Wise Living
There’s no doubt we’ve been living through turbulent times of late, both personally and professionally. For months, the property market has been significantly affected and even though some restrictions have now been lifted, the return to anything resembling normality is going to take some time.
While there are some green shoots of recovery, developers are understandably looking at their portfolios and looking for ways to reduce their reliance on open market sales. We’re now seeing a number of regional house builders interested in exploring how the inclusion of Build to Rent on new schemes can help to de-risk their business model going forward. In these challenging times, a number of housebuilders are starting to shift their thinking and plans on current schemes, with an increased willingness to explore the Build to Rent sector – with options to guarantee both income and a secure exit from developments.
Dividing current sites into a mixture of both PRS and open market is becoming an increasingly attractive proposition. Businesses, like our own, are in a position to take units as fast as developers can build them – as we can let units at a much quicker rate than developers can sell them, which is often the throttle on site delivery. This pace of delivery brings a number of benefits to developer partners and also to Local Authorities in terms of getting the numbers delivered even through these challenging times.
The rental market has proved its resilience before in challenging economic times when the rest of the housing market has struggled. If we look back to the credit crunch of 2008, the rental market hardly moved and rents held firm, compared to the open market which saw a significant shock with a huge drop in transaction levels and values. The rental market is proving its resilience once again, with Rightmove saying demand for rental property is currently up 33% year-on-year.
One of our Build to Rent developments in Mansfield, Nottinghamshire, is a great example of this. We decided to launch applications for homes at The Old Brewery just after lockdown began, and in just a matter of weeks, phase one was 100% let, despite people not even being able to visit the development.
With the rental market still moving at a very fast pace, think of the potential that could bring to a new build development. For example, if a site is split between the open market, PRS and affordable homes, the PRS units can be built and let quickly. The result is that developments become busy quicker and potential buyers can see a community beginning to build, street scenes come to life, and in turn, more people will want to live there. We’re also seeing Local Authorities starting to recognise the benefits of Build to Rent – either as a stand-alone site or as a mixed tenure development, and increasingly they are often very supportive in encouraging them to come forward.
As we move through the coming weeks and months and the true impact of Covid-19 on the property market becomes apparent, I fully expect we will see more housebuilders exploring their options as they look to refocus. Ultimately, the perception of the Build to Rent and PRS sector is changing for the better.
Developers are starting to see that the model is completely different to working with a landlord with just a couple of properties. The focus is on showing how PRS schemes can be professionally managed, which doesn’t just include the letting but continues long after the build is complete, looking after residents and maintaining both the street scenes and homes, while building that all-important sense of community.