By Paul Staley, Director, Wise Living
The Build to Rent market continues to grow at a pace – and it doesn’t look like it will be abating anytime soon. Despite the disruption caused this year, plans for Build to Rent developments and units continue to grow.
According to research up to August 2020 by the British Property Federation (BPF), over 160,000 Build to Rent homes have either been complete, are under construction or in planning in the UK. This is a growth of 22% since August 2019.
A recent report by Knight Frank and HomeViews – which looked at investment in the UK Build to Rent market – estimated that over £4bn will be invested in Build to Rent in 2020 – more than in any of the previous five years, proving the resilience of the sector.
In these uncertain times, the opportunities for developers to de-risk developments and guarantee an income flow is more important than ever. Surprisingly, the majority of developers are yet to take advantage of the benefits Build to Rent could bring to their business, as according to the BPF, only 17% of all Build to Rent developments are undertaken by UK developers.
Even if pent-up demand and stamp duty breaks have driven a wave of house buying activity, experts are still predicting a drop in sales activity and values in 2021.That’s why mixing open-market and Build to Rent units on developments is becoming increasingly appealing, but you need to choose the right partner to bring forward successful schemes.
Reduce the risk of shifting housing stock
The opportunities in Build to Rent do not just lie within your typical high-rise multifamily schemes in London and the big regional cities such as Manchester, Birmingham and Leeds. There are a growing number of single-family Build to Rent schemes that have a broader appeal and can be successful in the smaller towns and cities the length and breadth of the country -from Telford to Hull and Swindon to Preston, and on schemes as small as 30 properties and up to 150+, making it not just an opportunity for the ‘big boys’.
By reducing the number of open-market units and introducing Build to Rent properties, developers are lowering the risk of shifting housing stock while at the same time adding a new source of income. This is something that could be really vital during the next 12-18 months – as the UK tries to recover from the economic aftershock of Covid-19.
As the Build to Rent provider, Wise Living is keen to work with a wide range of developer and house builder partners, although this needs to be at the concept and planning phase to ensure what is planned is suitable for Build to Rent and maximises returns for both the investor and developer.
Build to Rent providers will often take the first phases on a housing scheme – giving the developer an early cash injection while providing an instant street scene and community, which will often help with subsequent sales – and subsequently – sales values achieved.
Clear appetite for rental properties
Renters continue to show their appetite for high-quality rental homes. More specifically, Build to Rent homes with private and/or communal gardens have seen an 83% increase of interest according to Rightmove. Wise Living has also experienced significant demand for its rental products throughout the lockdown and since, being able to reserve and let properties without physical viewings being undertaken. This is something replicated by other major Build to Rent providers – proving the right product in the right location will let whatever the economic climate.
An example of this are two recent Wise Living Build to Rent schemes in Mansfield and Telford – not the typical Build to Rent location you would imagine. However, both were launched during the lockdown period in March and July respectively, and both schemes had the first two phases fully reserved before any actual properties were released – despite no physical viewings being able to take place. They are now fully reserved and have an average void period from handover of less than four days.
Wise Living continues to work with an increasing number of developers throughout the UK, helping them unlock opportunities. Thanks to these partnerships, our five-year plan remains on track and we expect to deliver 2,000 new homes each year up until 2025. Economic woes bite. Therefore, now is the right time for developers to look to Build to Rent as the UK public reconsiders their next home options.