Experts are now predicting that Britain could be on the verge of a rental revolution, as build to rent properties begin to spring up in different shapes and sizes across the country.
At last count there was around £30 billion worth of institutional investment earmarked for different build to rent schemes, in which rental blocks are developed and managed by the same institution, rather than being sold off as different entities.
Heralded by some as a solution to the housing shortages that Britain’s 9 million renters are currently facing, and dismissed by others as appealing to only a niche portion of the property market, build to rent can still be a bit of a minefield for the uninitiated. So, for tenants considering these new developments, we’ve outlined some of the pros and cons to build to rent properties below:
The Benefits Of Living In A Build To Rent Development
- The clue is in the title: build to rent blocks are purpose-built for the rental market, meaning that they’ve been specifically designed with the tenant in mind. Communal spaces, entertaining areas and washing facilities (well ventilated to reduce the likelihood of mould) are just some of the on-site facilities build to rent properties are likely to offer.
- Easy living: economies of scale mean that build to rent developments can offer a higher standard of living than many of the smaller scale landlords currently operating in the rental market, 80% of whom own only one property and are likely to manage it as a second source of income rather than a primary focus. Fixtures and fittings will be simple and easy to fix – at the very least build to rent developments tend to bypass gas central heating in favour of something more user friendly.
- They mean business: the owners of build to rent developments, who tend to be institutional investors, see their properties purely as a business venture. Consequently, tenants can expect higher standards and a greater transparency – for example build to rent developments usually have onsite management available around the clock to deal with tenant issues.
- Long-term outlook: In keeping with their business-minded perspective, the owners of build to rent developments are looking for long-termers so leases tend to be three-year standard terms, rather than one. This is good news for tenants looking to put down real roots without having to move every few years.
For your average tenant, it seems like a no-brainer. The opportunity to move somewhere specifically designed with a renter in mind, with better facilities than you’ve experienced previously, for a longer tenancy than is usually on offer. Could the period features of your Victorian conversion flat with its dodgy boiler be a distant memory?
But before you hand in your notice, beware that the business-driven nature of build to rent operators are not only their greatest strength, but also their biggest weakness. And that’s where the downside comes in.
The Downsides Of Living In A Build To Rent Development
- Lack of human touch: in the current rental market, renters have the opportunity to build up a relationship with their landlord, one that they can enhance by being a reliable and responsible tenant. In these scenarios a landlord will often be more than reasonable when it comes to rental increases, often not raising the rent as much as they could for risk of jeopardizing the relationship or losing a good tenant. Set against that status quo, a business/build to rent provider is unlikely to take personal circumstances, like job loss, divorce or bereavement into account when it comes to setting rent rates. They will set their rent in line with inflation regardless, meaning that annually your rent will almost certainly go up, whether or not your wages do.
- Location: another thing to bear in mind is that currently build to rent developments are only targeting big cities, with 80% of projects listed last year being London-based. They’re also likely to be the higher end of the market, which means they may be just out of reach for the people who need them most.
So in conclusion, build to rent is definitely still a work in progress and they won’t suit everyone. For those tenants who do decide they’re suitable, however, build to rent could be not just a work in progress but be a work of progress too.
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