Build-to-Rent or Private Sector?

Build to Rent

Posted by Edward Jonkler on July 9, 2020

Undoubtedly, the rise of Build-to-Rent is changing the face of the private rental sector forever. 

It is actually anticipated that when the BTR market reaches maturity, it will be worth £543.6 billion (up from £9 billion this year), providing homes for more than 1.7 million households. 

Indeed there is a hope that Build-to-Rent will help the crack-filled and creaking private rental sector more broadly, by driving down rents for poorer quality homes and generally driving up standards of rental properties across the country. 

In London in particular, corporate landlords appear to have the edge by offering increased rental security, longer leases and professionally managed accommodation. 

Unlike private renting, Build-to-Rent offers a stabilised rent. Many operators offer leases as long as three to five years (which includes annual-inflation linked rent rises but no more), compared to six to 12 months assured tenancy, which is the standard private rental lease in England.

On top of these, Build-to-Rent developers are generally in this for the long haul, so there’s less worry that they’ll suddenly decide to sell up and move, as a private landlord might. 

In terms of day to day living, the appeal is obvious too. ‘Hassle-free’ renting is a draw for busy lives, with utility bills, TV licensing and wifi usually all covered within the rent. 

On top of the regular social events and communal facilities, including co-working spaces and games rooms, the maintenance of the building is safely and professionally managed. Tenants need not worry about chasing their landlord to fix a leak, with many developments offering on-site staff to help out, no matter the time of day. 

Overall, Build-To-Rent is an attractive option for those who are unable or unwilling to buy their homes, offering high-quality housing, envious locations and a modern, social lifestyle for renters.

But is it really better for all tenants? 

Although the state-of-the-art design and promises of games rooms, gyms and rooftop bars are supposedly a tenant’s dream come true, the overall cost of BTR over the private rental sector is simply not an option financially for all tenants.

Due to the added facilities and the appeal of the community feel, those living in Build-to-rent in London will typically pay 11 per cent more than those living in rented accommodation within the private rental sector. Added up over the year, thats a big hit to the savings the account. 

If tenants are hoping to live in BTR before buying a house, it will therefore take them significantly longer to save enough to buy, than in the private rental sector. 

Overall, there is, undeniably, a market for Build-to-Rent and the modern standard of living is certainly a draw. But at the end of the day, the tenants decision will most likely be swung by personal current and future financial concerns, and whether a landlord offers a good service, contemporary interiors and concierge services won’t help tenants save for the future, or make renting more affordable for all.  

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