Build to Rent has been a hot topic for a little while now – and LandTech recently hosted a webinar to find out the reasons behind its meteoric rise. They gathered together a panel of experts from across the sector, which included Stuart Tym, Partner and Rick Atha, Partner at Shoosmiths, Ed Ellerington, Founder and Joint Managing Director at Packaged Living and Nick Biring, Co-founder at BTR News.
By Shannon Lynn, Community Content Specialist, LandTech
The panel discussed why Build to Rent has grown from strength to strength in recent years and what the future could hold for the rental space. We highlight the key points from the webinar and why Build to Rent is experiencing such a boom – and the on-demand version of the webinar is available to catch all the expert insights.
Filling a gap left by the housing crisis
The UK’s ongoing housing crisis and the shortage of supply have led to more demand in the rental sector. The pipeline of supply was too slow to meet the demand for new homes with just the ‘for sale’ model alone. As the Letwin report highlights, the target of producing 300,000 new homes would be reached more quickly if there was a wider variety of models.
And Build to Rent stepped in to increase the mix of properties coming to market to plug that gap. Previously, the rental market had been shrinking, but the rise of Build to Rent is reversing this trend by increasing the supply of high-quality rental homes. Increased house prices have also pushed the idea of owning a home further out of reach for many – leading to more people living in rented homes for longer.
Build to Rent developments were previously seen as homes for a younger demographic – either students or young professionals looking for a similar experience to their university days. However, spurred by inflated prices and lack of supply, the Build to Rent lifecycle is now designed to cater to all demographics and stages of life – from families in their 30s, to later living homes. These new demographics have different expectations of what they want from a rented property.
Changing consumer demand
More and more, residents are looking for a sense of community and wellness within their living environment. This experience comes in many shapes and forms. But it boils down to building spaces that are designed to encourage interaction and engagement. As Nick Biring, Co-founder of BTR News mentioned, it’s key to include places “where people meet each other, get to know each other, where events are actually held.”
On the flip side, what Build to Rent is not about is creating ‘ivory towers’ or exclusive clubs for residents only. The vision is to situate buildings, and include spaces where residents can connect with the wider community. For example, not including every amenity within the development provides residents with the chance to go out to local shops and restaurants.
Renters are also looking for security of tenure and a high level of service and maintenance. This is often not a priority in privately rented properties but is very much part of the Build to Rent model – and a reason for their increased popularity with renters.
Increased appetite from investors
The higher rents and better premiums that come with Build to Rent developments make them an attractive investment for large institutional investors. Their proven popularity in recent years has meant that more institutions are looking to invest, which has, in turn, further increased the Build to Rent sector’s growth.
With more developments being financed by institutions, they’re being held to a higher standard as their reputation is on the line. They are not only spurred by individual wealth, like with a private landlord, but they have to factor in considerations like community building too.
Forward-funding has also encouraged a lot of investors into the space, as they have to carry minimal risk as it is passed down the chain. Although securing investment for Build to Rent projects can be challenging for developers, there is a big market out there if you have the risk appetite for it – and the right tools to help you spot opportunities quickly.
Ready to start searching for Build to Rent opportunities?
LandInsight, LandTech’s site sourcing software can help you find and assess Build to Rent opportunities faster than ever. With everything you need in one place, you can streamline how you source and evaluate off-market sites – allowing you to get ahead of your competition.
Want to see LandInsight in action? Email Sam Goodman at email@example.com