The American-style build-to-rent sector is rapidly expanding in our cities and experts believe it is poised to bring about a revolution in how Britain’s urban population live.
There are 83,650 flats or houses either completed or being built across the UK — a rise of 13,826 in two months — and more are being planned. A total of 36,412 of these properties are outside London, according to the British Property Federation, with Manchester the sector’s biggest growth area.
Supporters of the build-to-rent sector say it provides a service-driven alternative to Britain’s landlord-driven private rental sector, in which the vast majority of tenants live. They are new-builds constructed by big international developers, often supported by pension and insurance sector cash, and sometimes packed with facilities such as swimming pools, gyms and even yoga studios.
“Classification will emerge to help renters to distinguish between the level of service on offer
Such is the diversity of different properties on offer that the property consultancy JLL believes that a hotel-style star classification system is just round the corner, to help would-be tenants to find a property with the right amount of luxury and in the perfect price bracket. “There is a misconception that the emerging build-to-rent sector is solely targeting delivery of luxury homes for renters who are prepared to pay a premium,” Nick Whitten, JLL’s associate research director, says. “Our analysis shows that the build-to-rent units being delivered in London are split roughly 38 per cent luxury, 42 per cent mid-range and 20 per cent affordable.”
“It is likely that, in the near future, a form of classification will emerge to help renters distinguish between the level of service on offer, like star ratings in the hotels sector.”
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Affordable versus premium
The developments vary widely, based on prices and facilities. One luxury example is Vantage Point in Archway, north London, which is owned and operated by Essential Living. Studio flats here can be let from £485 a week, and they come with a games room, library, meeting room and two roof terraces with panoramic city views.
The 133-home Old Vinyl Factory, in Hayes near Heathrow airport, operated by Be:here, is a mid-range development. The scheme, near the local Crossrail station, will encompass homes, commercial and social spaces. Flats ranging from one to three bedrooms will be available from about £280 a week.
On the more affordable side, a 500-flat build-to-rent scheme will be constructed on the site of the former Kent Street Baths in Southside, Birmingham, which is a rapidly expanding build-to-rent area. Meanwhile, Greystar’s Greenford development in west London will be one of Britain’s largest build-to-rent schemes. It is being constructed on 20.3-acre site, with 1,965 homes, 75 per cent of which will be available to rent.
Greystar, a significant player, has committed to increasing its UK portfolio by 10,000 units over the next four years. Mark Allnutt, the managing director, says: “We are not necessarily trying to persuade anyone who owns a home that they should be a renter. There are a large amount of people who currently rent, for a variety of reasons, and what we are trying to do is to give them a completely different choice.”
Manchester boom
In Manchester and Salford slightly fewer than 6,000 units are under construction, compared with 8,500 in London. The city is fertile territory for the sector because of the chronic undersupply of housing in the centre. According to JLL research, Manchester city centre has 3,000 fewer homes than it needs and the rate of inward migration (80,000 more people are expected to live there by 2024) will mean that this trend will continue.
“Scotland still lags behind London and other major regional centres
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Numerous high-profile schemes have been developed here. They include GreenGate, Manchester’s first such project, which has a 24-hour concierge, a gym and a communal courtyard. There are 497 flats here owned by LaSalle Investment Management.
Realstar, one of the biggest players in the build-to-rent sector, has also cashed in with a planned development near Piccadilly station, which will include a gym and yoga and art studios for £800-£825 a month. All the homes will be furnished by the internet interiors company Made.com.
The 225-flat Slate Yard development allows residents to hang pictures, paint walls and keep pets. Legal & General Investment Management, the asset manager behind the development, has raised £1 billion from investors and its parent company to invest in the build-to-rent market.
The biggest scheme in the works in Manchester is Affinity Living at Circle Square, the big redevelopment on the Oxford Road thoroughfare. The £247 million scheme, with 677 units, is being delivered by Select Property Group in a joint venture with Greater Manchester Property Venture Fund.
Scottish market emerges
A chronic lack of supply and growing demand for rental accommodation in big Scottish cities has led to predictions that Glasgow and Edinburgh will be the next build-to-rent hotspots. A new £215 million “build-to-rent village” is planned for the Fountainside area of Edinburgh, to be built by Moda Living in combination with Apache Capital. It will contain 570 new homes and be built by 2022.
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Andrew Meehan, a researcher at Rettie & Co, says: “Both Edinburgh and Glasgow have seen major announcements of large-scale, build-to-rent projects now in planning for development. These schemes will supply over 2,500 units in Scotland’s two largest cities. While this is a step forward, Scotland still lags behind London and other major regional centres in leveraging institutional investment to deliver any volume of new housing at pace.”
The demanding millennials
Figures released by the English Housing Survey last week show that 20 per cent of households in England, or 4.5 million people, rent. That’s a rise of 2.5 million since 2000. The Royal Institution of Chartered Surveyors estimates that the country has a shortfall of 1.8 million rental properties.
Build-to-rent developers believe that amenity-rich, service-focused, build-to-rent projects will appeal to a younger generation that are more demanding than their predecessors. “The combination of affordability and the service and amenities you get in a large-scale rental development is attractive to a lot of people,” says Ryan Prince, a principal of the Canadian company Realstar.