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Build-to-Rent Boom

29.09.21

Build-to-Rent (BTR), building homes for the specific purpose of renting, is a hot topic in the property industry at present. Inspired by what’s available in large parts of Europe and North America, where it’s known as ‘multifamily housing’, this ‘saviour’ sector has emerged in response to soaring demand for quality rental housing, with new developments reflecting the changing needs and priorities of modern-day tenants.

London is leading by example. Over the past eighteen months, BTR has accounted for almost one in five newly completed properties, supported by institutional investors including Legal & General, Quintain, Greystar and Goldman Sachs with nearly 83,000 more homes in the capital’s BTR pipeline, according to the British Property Federation. Apartment living for ‘rental professionals’, has also now been tabled by government as a priority focus going forward, potentially accounting for as much as 20%, (if not more), of the new-build market.

For renters, it offers a new, exciting alternative to the private lettings market. The sector focuses on vibrant, urban living built around an ethos of community that’s missing from traditional pay-as-you-go markets. As new generations opt to rent as a lifestyle choice, we can expect to see demand soar even more.

But perhaps the greatest incentives are there for developers and investors. Build-to-Rent is, at its core, a simple concept. Because of this, it’s a relatively risk-free venture. Developers are, for example, less reliant on collaboration with third parties such as estate and letting agents to find tenants for the units, thus increasing the speed and efficiency of filling new developments.

Furthermore, due to build to rent homes often being a step up in quality and standard compared to private rental market, tenants are often inclined to sign longer tenancy agreements, thus reducing the risk of voids.

The sector is also being viewed by some, as a bridge between renting and owning, so enterprising developers who go as far as to provide freedom for tenants to personalise their home with wall colour, will likely enjoy even longer tenancies and even less turnover. All of this contributes to a very attractive investment opportunity for all involved, so watch this space.

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